Search Now

Recommendations

Wednesday, August 06, 2008

India Strategy - Aug 6 2008


India Strategy - Aug 6 2008

Telecom Sector


Telecom Sector

Steel Sector


Steel Sector

Monthly Picks - Aug 6 2008


Monthly Picks - Aug 6 2008

BSE Bulk Deals to Watch - Aug 6 2008


Deal Date Scrip Code Company Client Name Deal Type * Quantity Price **
6/8/2008 520123 ABC INDIA LT RAJIV ARORA S 45398 56.41
6/8/2008 521131 ANJANI FABRI RAKESH NIRANJANLAL AGARWAL S 70186 15.43
6/8/2008 531223 ANJANI SYNTH NARENDRA VALLABHJI BAHUVA B 57737 40.09
6/8/2008 531223 ANJANI SYNTH NARENDRA VALLABHJI BAHUVA S 57737 39.74
6/8/2008 532870 ANKIT METAL HOLLY FIELD TRADERS PVT LTD B 497054 51.35
6/8/2008 532870 ANKIT METAL ZENON INDIA PVT LTD S 500000 51.35
6/8/2008 500034 BAJAJ AUTO F BLUERIDGE OFFSHORE MASTER LTD PASTERSHIP S 360575 121.58
6/8/2008 531937 BECKONS INDS JASJOT SINGH B 71402 8.38
6/8/2008 531937 BECKONS INDS JASJOT SINGH S 73400 8.37
6/8/2008 532542 CREW BOS YUVAK SHARE TRADING PVT.LTD. B 116978 42.41
6/8/2008 532542 CREW BOS YUVAK SHARE TRADING PVT.LTD. S 114976 42.40
6/8/2008 532610 DWAR SUGAR R.D INVESTMENT B 87590 82.30
6/8/2008 509567 GOA CARBON L YUVAK SHARE TRADING PVT.LTD. B 47131 140.60
6/8/2008 509567 GOA CARBON L YUVAK SHARE TRADING PVT.LTD. S 47008 141.20
6/8/2008 500163 GODFREY PHIP GOOD INVESTMENT INDIA LIMITED B 185000 1535.00
6/8/2008 500163 GODFREY PHIP SPIN INVESTMENT INDIA LTD S 185000 1535.00
6/8/2008 530885 JAISAL SECUR RAJAGOPALAN K P B 28600 37.10
6/8/2008 530885 JAISAL SECUR PALANICHAMY A S 26600 37.10
6/8/2008 522259 KALIN RAIL N SOROS FUND S 99888 190.00
6/8/2008 532283 KASHYAP TEC OM EDUCATION IT PVT. LTD B 3450513 1.47
6/8/2008 532283 KASHYAP TEC OM EDUCATION IT PVT. LTD S 3516318 1.49
6/8/2008 531602 KOFF BR PICT LAXMI CAP BROKING PVT LTD B 104000 21.79
6/8/2008 531602 KOFF BR PICT LAXMI CAP BROKING PVT LTD S 25910 21.53
6/8/2008 532606 PAREKH ALUM RAJASTHAN GLOBAL SECURITIES LTD B 200208 137.51
6/8/2008 532606 PAREKH ALUM MANISH MARU S 196767 137.49
6/8/2008 524194 ROCK HARD PE ISHA PIYUSH SHAH B 40820 8.04
6/8/2008 517224 SUJANA UNIV S V ENTERPRISES B 1358577 14.55
6/8/2008 517224 SUJANA UNIV S V ENTERPRISES S 1429163 14.20
6/8/2008 530585 SWASTIK INV SEEMA JAIN B 20000 23.87
6/8/2008 532338 VALUEMART IN S V ENTERPRISES B 237569 5.03
6/8/2008 532338 VALUEMART IN S V ENTERPRISES S 193656 5.00
6/8/2008 531249 WELL PACK PA SAMIR S SHAH HUF B 118444 15.60
6/8/2008 531249 WELL PACK PA VINOD KUMAR MAFATLAL PATEL S 78460 15.60
6/8/2008 531249 WELL PACK PA PUSHPABEN VINODBHAI PATEL S 48215 15.60
6/8/2008 512167 YASHRAJ SECR GOPALA PILLAI VIJAYAKUMAR B 300000 8.10
6/8/2008 512167 YASHRAJ SECR ADMIRE ENTERPRISES PVT LTD S 100000 8.10
6/8/2008 512167 YASHRAJ SECR MUJAHID A. SHAIKH S 100000 8.18
6/8/2008 512167 YASHRAJ SECR IRFAN K. KAZI S 100000 8.10

NSE Bulk Deals to Watch - Aug 6 2008


Date,Symbol,Security Name,Client Name,Buy/Sell,Quantity Traded,Trade Price / Wght. Avg. Price,Remarks
06-AUG-2008,CREWBOS,Crew B.O.S. Products Limi,SVS SECURITIES PVT. LTD,BUY,86367,42.42,-
06-AUG-2008,DHAMPURSUG,DHAMPUR SUGAR MILLS LTD,TRICOLOR ADVISORY SERVICES,BUY,290000,65.73,-
06-AUG-2008,DWARKESH,Dwarikesh Sugar Industrie,R. D. INVESTMENTS,BUY,156718,82.96,-
06-AUG-2008,FIRSTWIN,First Winner Industries L,RAGHUNATH VISHWANATH DESHPANDE HUF,BUY,100000,150.12,-
06-AUG-2008,GOLDTECH,Goldstone Tech Ltd.,ANANTHA KRISHNAN M V S,BUY,185400,122.87,-
06-AUG-2008,GOLDTECH,Goldstone Tech Ltd.,GOPAL KANE,BUY,150000,131.90,-
06-AUG-2008,GOLDTECH,Goldstone Tech Ltd.,SUMMIT COMMUNICATION PRIVATE LIMITED,BUY,65000,119.35,-
06-AUG-2008,GOLDTECH,Goldstone Tech Ltd.,YUVAK SHARE TRADING PVT LTD,BUY,178382,127.59,-
06-AUG-2008,ISPATIND,Ispat Industries Limited,JAYPEE CAPITAL SERVICES LTD.,BUY,6304024,28.33,-
06-AUG-2008,KALINDEE,Kalindee Rail Nirman (Eng,HDFC MUTUAL FUND A/C MIDCAP OPPORTUNITY,BUY,200000,189.92,-
06-AUG-2008,NDTV,New Delhi Television Limi,MORGAN STANLEY MAURITIUS COMPANY LTD,BUY,1250000,410.00,-
06-AUG-2008,SABERORGAN,Sabero Organics Gujarat ,YUVAK SHARE TRADING PVT LTD,BUY,159321,23.90,-
06-AUG-2008,SASKEN,Sasken Commu Techno Ltd,MBL & COMPANY LTD.,BUY,154216,152.97,-
06-AUG-2008,SOUTHBANK,South Indian Bank Ltd.,TEMPLETON MUTUAL FUND A/C FRANKLIN INDIA,BUY,505905,115.01,-
06-AUG-2008,XLTL,XL Telecom Limited,FIN BRAINS SECURITIES (INDIA) LTD.,BUY,126793,221.43,-
06-AUG-2008,BAJAUTOFIN,Bajaj Auto Finance Ltd,BLUE RIDGE OFFSHORE MASTER LIMITED PARTNERSHIP,SELL,480000,121.50,-
06-AUG-2008,CREWBOS,Crew B.O.S. Products Limi,SVS SECURITIES PVT. LTD,SELL,86367,42.31,-
06-AUG-2008,GOLDTECH,Goldstone Tech Ltd.,BULL INVESTMENTS MADRAS PVT LT,SELL,185400,122.85,-
06-AUG-2008,GOLDTECH,Goldstone Tech Ltd.,SUMMIT COMMUNICATION PRIVATE LIMITED,SELL,128000,131.87,-
06-AUG-2008,GOLDTECH,Goldstone Tech Ltd.,YUVAK SHARE TRADING PVT LTD,SELL,209655,130.15,-
06-AUG-2008,ISPATIND,Ispat Industries Limited,JAYPEE CAPITAL SERVICES LTD.,SELL,7080239,28.45,-
06-AUG-2008,KALINDEE,Kalindee Rail Nirman (Eng,QUANTIUM (M) LIMITED,SELL,262622,190.00,-
06-AUG-2008,MOSERBAER,Moser-baer (I) Ltd,T ROWE PRICE INTERNATIONAL INC EMERGING MARKETS EQUITY TRUST,SELL,1019122,96.78,-
06-AUG-2008,NDTV,New Delhi Television Limi,RRPR HOLDING PRIVATE LIMITED,SELL,1249985,410.00,-
06-AUG-2008,SABERORGAN,Sabero Organics Gujarat ,YUVAK SHARE TRADING PVT LTD,SELL,163862,24.08,-
06-AUG-2008,SASKEN,Sasken Commu Techno Ltd,MBL & COMPANY LTD.,SELL,123372,152.99,-
06-AUG-2008,SOUTHBANK,South Indian Bank Ltd.,SWISS FINANCE CORPORATION (MAURITIUS) LIMITED,SELL,532968,115.07,-
06-AUG-2008,XLTL,XL Telecom Limited,FIN BRAINS SECURITIES (INDIA) LTD.,SELL,126796,221.62,-

Post Session Commentary - Aug 6 2008


The domestic market pares most of its initial gains during the final hours of the session on the back of heavy profit booking across the sectoral indices. Market opened on strong note tracking favorable cues from global markets as the US Federal Reserve held key interest rate at 2% in a meeting on 5th August 2008. The market therefore continued its northward journey but the speed of the journey was reduced since after noon as market lost some ground but managed to close with gains. Weak cues from the European markets also upset the positive sentiment. NSE Nifty ended above 4,500 mark and BSE Sensex crossed 15,000 level. From the sectoral front, Capital Goods, Auto, IT, Consumer Durables and IT stocks were able to gather the buying momentum. Fall in crude oil prices helped auto stocks to rally. However, Metal stock was most unfavorable stock as most of the selling was seen from this basket. The market breadth was negative as 1266 stocks closed in green while 1444 stocks closed in red and 76 stocks remained unchanged.

The BSE Sensex closed higher by 112.47 points at 15,073.54 and NSE Nifty ended marginally up by 14.70 points at 4,517.55. The BSE Mid Caps closed with gains of 11.54 points at 5,855.42 and Small Cap ended down by 48.66 points 7,144.13. The BSE Sensex touched intraday high of 15,422.82 and intraday low of 15,035.60.

Gainers from the BSE are Maruti Suzuki (6.25%), Tata Motors (4.31%), Bharti Airtel (3.59%), ACC Ltd (3.48%), TCS Ltd (3.32%), BHEL (3.21%), HDFC Bank Ltd (2.74%), M&M Ltd (2.55%) and L&T Ltd (2.39%).

Lossers from the BSE are Tata Steel (2.48%), Tata Power (3.65%), SBI (3.49%), Reliance Infra (3.11%), HDFC (2.82%), DLF Ltd (1.55%), NTPC Ltd (1.07%) and Ranbaxy Lab (0.68%).

The BSE Capital Goods index closed higher by 203.11 points at 12,482.88. Gainers are Jyoti Struct (10.14%), Bharat Bijli (5.72%), Elecon Eng C (5.05%), Thermax Ltd (3.81%), Crompton Greaves (3.73%) and BHEL (3.21%).

The BSE Auto index ended up by 100.47 points at 12,482.88. As Maruti Suzuki (6.25%), Bajaj Auto (5.77%), Bharat Forge (5.19%), Tata Motors (4.31%), Apollo Tyre (2.86%) and M&M Ltd (2.55%) closed in positive territory.

The BSE IT index gained 45.37 points to close at 3,923.67. Major gainers are Moser Bayer (5.49%), Mphasis Ltd (3.87%), TCS Ltd (3.32%), Satyam Computer (1.94%) and Tech Mahindra (1.38%).

The Oil & Gas index ended up by 28.58 points at 10,187.69. As HPCL (2.24%), Cairn India (1.85%), IOC (1.77%), ONGC (1.35%) and Reliance (0.87%) closed in positive territory.

The Metal index closed down by 405.64 points at 12,859.19. Lossers are Ispat Industries (5.83%), JSW SL (5.69%), Nalco (5.09%), NMDC Ltd (5.00%), Jindal Steel (4.78%) and Tata Steel (4.48%).

The BSE Reality index ended down by 32.40 points at 5,542.67. Major lossers are Houing Dev (4.51%), Mahindra Life (2.77%), Unitech Ltd (2.56%), Omaxe Ltd (2.08%), Parsvnath (2.08%) and Orbit Co (1.55%).

Rally fizzles out in late trade; PSU banks slide


Stocks ended volatile session slightly higher extending gains for the second straight day. Strong global cues triggered a solid rally in first half of the day’s trading session. However profit booking at higher levels in second half capped gains. Volatility was high towards later part of the day.

As per provisional data released by BSE after trading hours, foreign funds today, 6 August 2008, bought shares worth a net Rs 1815.74 crore. Domestic funds sold shares worth a net Rs 804.36 crore.

Shares of state-run banks slipped. The market breadth turned negative in late trade in contrast to a strong breadth earlier in the day. BSE turnover crossed Rs 7,000 crore mark.

The US Federal Reserve at a meeting held after Indian market hours yesterday, 5 August 2008, held key interest rate at 2%. The Federal Open Market Committee said that inflation has been high but insisted that price rises will eventually moderate. Though it expressed concerns about economic growth and inflation, it indicated it is in no rush to push borrowing costs higher.

The BSE 30-share Sensex rose 112.47 points or 0.75% to 15,073.54 after oscillating in a band of 387.22 points. At the day’s low of 15,035.60 touched in late trade, the Sensex gained 74.53 points. The market opened with an upward gap of 302.58 points at 15,263.65 and surged further to strike an intra-day high of 15,422.82 in early trade. At the day’s high, the Sensex advanced 461.75 points.

The BSE Sensex is down 5,213.45 points or 25.69% in the calendar year 2008 so far from its close of 20,286.99 on 31 December 2007. It is 6,133.23 points or 28.92% away from its all-time high of 21,206.77 struck on 10 January 2008.

The S&P CNX Nifty rose 14.70 points or 0.33% to 4,517.55. Nifty August 2008 futures were at 4518.90, a slight premium of 1.35 points as compared to spot closing.

The market opened with an upward gap boosted by the Fed decision. A further slump in crude oil prices also boosted the sentiment. The BSE Sensex surged past the 15,000 mark in opening trade.

The market breadth, which was strong throughout the day, turned negative in late trade. On BSE, 1466 shares declined as compared to 1245 that rose. 78 remained unchanged.

The BSE Mid-Cap index was up 0.20% to 5,855.42. However the BSE Small-Cap index declined 0.68% to 7,144.13. Both these indices underperformed the Sensex.

The total turnover on BSE amounted to Rs 7,178 crore as compared Rs 6976 crore yesterday, 5 August 2008.

Sectoral indices on BSE displayed mixed trend. The BSE Realty index (down 0.58% at 5,542.67), BSE Oil & Gas index (up 0.28% to 10,187.69), BSE PSU index (down 1.23% to 7,050.97), BSE Consumer Durables index (up 0.49% to 3,867.31), BSE Health Care index (down 0.42% at 4,258.15), BSE Power (down 0.79% to 2,699.03), BSE Metal index (down 3.06% to 12,859.19), BSE Bankex (up 0.24% at 7,235.38), underperformed the Sensex.

The BSE Capital Goods index (up 1.65% at 12,482.88), BSE Auto (up 2.63% at 3,919.64), BSE TecK index (up 1.52% to 3,126.99), BSE FMCG index (up 0.89% to 2,179.58), and BSE IT index (up 1.17% to 3,923.67), outperformed the Sensex.

Among the 30-member Sensex pack, 19 advanced while the rest declined.

Auto counters were in demand throughout the day. Steady fall in crude oil prices, which slumped to 3-month low, propelled auto counters. India’s top small car maker in terms of sales, Maruti Suzuki India surged 5.63% to Rs 649 on 5.15 lakh shares. It was the top gainer from the Sensex pack.

Tata Motors (up 4.02% to Rs 425.50), and Mahindra & Mahindra (up 3.10% to Rs 565), also logged gains from auto pack.

Banking shares were mixed. HDFC Bank (up 3.94% to Rs 1231), and ICICI Bank (up 1.43% to Rs 703.20), gained. However India’s largest state-run ban in terms of net profit State Bank of India Bank lost 3.79% to Rs 1519.

Shares of state-run banks overturned after strong start. Vijaya Bank (down 3.66% to Rs 38.20), Andhra Bank (down 4.45% to Rs 59), Bank of India (down 2.96% to Rs 298.30), Bank of Baroda (down 5.94% to Rs 281), and Allahabad Bank (down 1.69% to Rs 64.10), declined.

Frontline telecom shares advanced. Bharti Airtel, the nation’s top mobile operator by revenue gained 3.62% to Rs 870. The company today, 6 August 2008, said it would launch Apple Inc's third-generation iPhone in India on 22 August 2008.

India’s number two cellular services provider in terms of market capitalisation Reliance Communications (RCom) was up 0.83% to Rs 445.90. According to recent reports, the company is all set to float a $500-million tender for GSM 3G networks. At present, RCom is predominantly a CDMA-based operator which is now looking at 3G services only in the GSM space.

India’s largest private sector firm by market capitalization and oil refiner Reliance Industries (RIL) advanced 0.66% at Rs 2291 on 14.07 lakh shares. The stock moved in a range of Rs 2348 and Rs 2282 so far during the day.

Oil and Natural Gas Corporation (ONGC), the country’s largest oil exploration company by market capitalisation gained 1.57% to Rs 1018.10. The company reportedly plans to scale up its gas production in Tripura and has revised the project cost to Rs 4376 crore from Rs 1817 crore.

Bharat Heavy Electricals jumped 2.97% to Rs 1822.90 after the company won first ever contract for supplying 800 mega watts supercritical boilers worth Rs 2,500 crore from Andhra Pradesh Power Development Company.

Larsen & Toubro, the country’s largest engineering and construction company in terms of sales, gained 2.11% to Rs 2756. The stock is trading 1:1 cum bonus.

Cement shares rose despite reports that they could find it difficult to raise prices when the moratorium on price freeze ends on 14 August 2008. Ambuja Cements (up 1.26% to Rs 88.50), Grasim (up 1.36% to Rs 2046), and ACC (up 3.82% to Rs 639.90), edged higher from the cement pack. In May 2008, cement firms had agreed to hold prices for three months to help the government contain skyrocketing inflation.

India’s fourth largest software services exporter Satyam Computer Services advanced 1.63% to Rs 406.15. As per reports, the company is pursuing 15-20 deals of over $50 million each and is eyeing buyouts in the Asia Pacific, US, and European continents.

TCS (up 2.91% to Rs 855), Hindustan Unilever (up 2.73% to Rs 246.60), and Wipro (up 1.63% to Rs 454.90) edged higher from Sensex pack.

Steel stocks declined for the second straight day on fears that the steel ministry would not allow steel producers to raise prices after an agreed 3-month freeze lapses on 8 August 2008.

India’s largest private sector steelmaker by sales, Tata Steel plunged 4.43% to Rs 646 on 21.68 lakh shares and was the top loser from the Sensex pack. The stock moved in a range of Rs 694.95 and Rs 642 during the day.

JSW Steel (down 4.93% at Rs 795.50), Bhushan Steel (down 3.32% at Rs 895) and Steel Authority of India (down 3.87% at Rs 145.50), slipped.

India’s third largest pharma company in terms of sales Cipla fell 1.11% to Rs 223.70 on reports Swiss drug major F Hoffmann-La Roche may move the Madras High Court against patent infringement of its HIV/AIDS drug Valcyte by Cipla. This would be a second suit by Roche against Cipla.

India’s largest power generation company in terms of revenue NTPC fell 1.10% to Rs 180.20. As per reports the company along with four international players would invest Rs 2500 crore in the next three years to generate 500 megawatts of power from renewable energy sources.

Reliance Infrastructure (down 3.19% to Rs 1010.15), and DLF (down 1.83% to Rs 543), edged lower from the Sensex pack.

HDFC, the country’s dedicated housing finance company in terms of revenue slipped 1.43% to Rs 2430. The stock came off sharply from day’s high of Rs 2585.

Reliance Natural Resources topped the turnover charts on BSE with turnover of Rs 374 crore followed by Reliance Capital (Rs 353 crore), Reliance Industries (Rs 327 crore), Larsen & Toubro (Rs 289.50 crore) and ICICI Bank (Rs 206.35 crore), in that order.

Reliance Natural Resources led the volumes chart on BSE clocking volumes of 3.60 crore shares followed by Ispat Industries (1.42 crore shares), Kashyap Technologies (1.28 crore shares), IFCI (1.10 crore shares) and IDFC (87.80 lakh shares), in that order.

Stocks of the sugar companies advanced on reports the government fixed lower-than-expected free sale sugar quota in August 2008 at 9 lakh tonnes. Triveni Engineering & Industries (up 13.25% to Rs 115), Sakthi Sugars (up 0.55% to Rs 110), Balrampur Chini (up 2.07% at Rs 93.60), Bajaj Hindustan (up 5.16% at Rs 181.50), and Shree Renuka Sugars (up 1.77% to Rs 135.40) spurted.

This move is likely to reduce the supply of sugar in the market, which will in turn drive up the price of sugar, ahead of the festival demand. Reports suggest that sugar prices in Maharashtra may spike in the first half of next year as output in the year ending September 2009 may fall by over 37%.

Shares of state-run oil marketing companies were mixed. Hindustan Petroleum Corporation (up 0.77% to Rs 236), and Indian Oil Corporation (up 1.59% to Rs 440.15), gained. However Bharat Petroleum Corporation lost 0.88% to Rs 333.30

Elecon Engineering Company jumped 6.38% to Rs 108.45 after the company said it has bagged five new orders aggregating to Rs 524.20 crore. The company made this announcement during trading hours today, 6 August 2008.

Geometric spurted 2.21% to Rs 55.50 after the company said it has signed a contract with Ford Motor Company to provide application management services for its engineering applications. The company made this announcement during trading hours today, 6 August 2008.

Hindustan Construction Company slipped 3.16% to Rs 99.60 even as the company said its joint venture has bagged an irrigation order worth Rs 1398.50 crore in Andhra Pradesh. The company made this announcement during trading hours today, 6 August 2008.

Phoenix Mills rose 2.28% at Rs 206.30 on reports its promoters are looking at divesting 15%-20% stake in the holding company to a strategic investor. The company management has already initiated talks with potential partners, including DLF, Reliance Capital and Indiabulls.

GMR Infrastructure fell 4.21% to Rs 101.15. As per reports the company is in the race for Russia's third-largest airport, Pulkovo Airport in St Petersburg, which has been put up by the Russian government for privatisation.

Meanwhile in a move that could boost stock markets, the ministry of finance is seriously looking at a proposal to make private provident funds, superannuation funds and gratuity funds that manage savings of employees of a number of corporate houses to appoint an asset management company or investment advisor to ensure that they deploy the savings of their employees efficiently. Guidelines on the same are expected soon.

The ministry also suggested doubling their exposure to the capital market from 5% and reducing their exposure to government securities from 40% to 35%.

US crude slumped $2.24 to $119.17 yesterday, 5 August 2008, after Tropical Storm Edouard hit the Texas coast without causing any major disruption to US energy operations.

European markets, which opened after Indian market, were trading higher. Key benchmark indices in UK, Germany and France were up by between 0.18% and 0.66%.

Asian markets, which opened before Indian market, edged higher today, 6 August 2008. Key benchmark indices in China, Taiwan, Singapore, South Korea, and Japan, were up by between 0.92% and 3.12%.

US stocks surged yesterday, 5 August 2008 after the Federal Reserve left interest rates unchanged and eased some of the market`s fears about the economy. The Dow Jones industrial average rose 331.62 points, or 2.94%, to 11,615.77. The Nasdaq Composite added 64.27 points, or 2.81%, to 2,349.83.

Market trims gains, closes above 15,000


The market held firm ground in the first half of the trading session, which saw the Sensex gain over 450 points. Backed by strong Asian markets and overall bullish mood, the market witnessed sharp upmove in most of the frontline and sector-based counters that triggered a major rally and lifted the Sensex to a new intra-day high of 15,423. The rally began to fizzle out in noon trades as extended selling pressure in most of the heavyweights dragged the index to a low of 15,036 in late trades, up 75 points from its last close of 14,961. The Sensex signed off the session above the 15,050 mark at 15,074, up 112 points, while Nifty advanced 15 points to close at 4,518.

The breadth of the market was however negative. Of the 2,786 stocks traded on the BSE 1,444 stocks ended lower, 1,266 stocks ended up and 76 stocks remained unchanged. The sectoral indices had a mixed day. The BSE Auto index rose over 2%, while the BSE capital goods (CG) index, BSE Teck index and BSE information technology (IT) index were up with steady gains. The BSE Metal index, BSE public sector unit (PSU) index, BSE Power index, BSE Realty index and BSE health care (HC) index however ended lower.

Select blue chip stocks notched up significant gains. Maruti Suzuki India led the pack with gains of over 6.25% at Rs652.80. Among other gainers, Tata Motors advanced 4.31% at Rs426.70, Bharti Airtel added 3.59% at Rs869.70, ACC scaled up 3.48% at Rs637.60, Tata Consultancy Services jumped by 3.32% at Rs858.45 and HDFC Bank flared up 2.74% at Rs1,216.80. Mahindra & Mahindra, Larsen & Toubro, Hindustan Unilever and ICICI Bank ended with decent gains. Weakness in select counters trimmed the gains of the index to a greater extent. Tata Steel at Rs645.65, Tata Power at Rs1061.10, State Bank of India at Rs1,523.70, Reliance Infra at Rs1,011, HDFC at Rs2,395.80 DLF at Rs544.60 and NTPC at Rs180.25 declined over 1-4% each.

Auto stocks registered decent gains. Bajaj Auto soared 5.77% at Rs559.45, Bharat Forge scaled up 5.19% at Rs269.70, Tata Motors moved up by 4.31% at Rs426.70 and Apollo Tyres gained 2.86% at Rs32.40. Mahindra & Mahindra, Ashok Leyland, MRF and Exide were up around 1.2% each.

Over 3.57 crore Reliance Natural Resources shares changed hands on the BSE followed by Ispat industries (1.42 crore shares), Kashyap Tech (1.27 Crore shares), IFCI (1.09 crore shares) and Tata Teleservices (85.87 lakh shares).

Grey Market Premium - Nu Tek stable, Austral decent


Vishal Information Technologies 140 to 150 3 to 5

NU TEK India Ltd. 170 to 192 5 to 7

Austral Coke & Projects 164 to 196 12 to 15

Castrol India


Castrol India

Pre Session Commentary - Aug 6 2008


The Indian Market is expected to have positive opening on strong global cues as US markets closed with heavy gains and Asian markets are trading on a firm note along with further drop in crude oil prices. On Tuesday, the Indian market closed in green mainly due to heavy buying over the counters led by steep drop in crude oil prices to $120 a barrel. The domestic market opened marginally lower tracking negative cues from the global markets. Further, it turned volatile but gathered momentum since afternoon and continued to gain ground till the end of session. NSE Nifty ended above 4,500 mark and BSE Sensex ended above 14,900 level, which reached very nearer to 15,000 mark. BSE Midcaps and Smallcaps traded with gains and ended with increase of more than 1%. From the sectoral front, Bank and Reality stocks reported sharp gains with increase of more than 6% followed by Auto stocks, which gained more than 4%. The BSE Sensex closed higher by 383.20 points at 14,961.07 and NSE Nifty ended up by 107.50 points at 4,502.85. We expect that market may see bull run during the trading session.

On Tuesday, the US market was closed with heavy gains on Fed’s decision to keep fund rate unchanged at 2% along with further drop in crude oil. Crude oil price fell to $118 a barrel before settling at $119.17 a barrel, down by $2.24 on the New York Mercantile Exchange.

The Dow Jones Industrial Average (DJIA) closed higher by 331.62 points at 11,615.77 along with NASDAQ ended up by 64.27 points at 2,349.83 and S&P 500 index closed higher by 35.87 points at 1,284.88.

Indian ADRs ended higher. In technology sector, Wipro ended higher by (4.90%) along with Patni Computers by (3.30%), Infosys by (3.98%) and Satyam advanced by (1.68%). In banking sector, ICICI bank and HDFC bank gained (15.54%) and (11.63%) respectively. In telecommunication sector, Tata Communication ended up by (5.00%) while MTNL dropped by (1.55%). Sterlite industries increased by (0.31%).

Today the major stock markets in Asia are trading in green. Japan’s Nikkei is trading higher by 287.24 points at 13,201.90 along with Taiwan Weighted trading up by 124.36 points at 6,937.76 and Singapore''s Straits Times trading at 2,886.49 advanced by 25.98 points. Hong Kong''s stock exchange is closed today due to a severe tropical storm and trading was canceled after weather officials issued a typhoon warning due to the storm

The FIIs on Tuesday stood as net seller in equity and debt. The gross equity purchased was Rs1,820.70 Crore and the gross debt purchased was Rs0.00 Crore while the gross equity sold stood at Rs222,1.30 Crore and gross debt sold stood at Rs9.50 Crore. Therefore, the net investment of equity reported was (Rs400.60) Crore and net debt was (Rs9.50) Crore.

Today, Nifty has support at 4,435 and resistance at 4,651 and BSE Sensex has support at 14,697 and resistance at 15,475.

Upturn may continue


After yesterday's pullback the market bias remains positive. The overnight gains in US markets and the major Asian indices like Nikkei, Hang Sang, Kospi, Straits Times and Jakarta Composite are trading with gains at nearly 2% each. The falling crude oil prices may help the investor sentiment remain bullish. However, the Federal Reserve left a key short-term interest rate unchanged The investors should remain cautious as intra-day volatility can not be ruled out. Among the domestic indices, the Nifty could test higher levels of 4540 and may dip to 4470 on the downside. The Sensex has a likely support at 15150 and may face resistance at 14870.

US indices surged to one of the year's biggest gains Tuesday, as oil prices fell sharply and investors appeared to take solace in the Federal Reserve's assessment of the nation's economy. While the Dow Jones was up by 332 points at 11616, the Nasdaq ended 64 points up at 2350.

Most of the Indian floats ended with gains on the US bourses. ICICI Bank led the gainers with gain of 15.54% follows by HDFC Bank advanced 11.63% and Tata Motors up by 8.64%. While VSNL and Wipro rose around 5% Infosys, Satyam, Patni Computer and Dr Reddy gained over 1-3% each. However, MTNL and Rediff lost over 1-2%.

Crude oil prices fell as the Fed holds rates steady, sparking more demand concerns for oil. While the Nymex light crude oil for September delivery slipped by $2.24 at $119.17 a barrel. In the commodity space, the Comex gold for December series moved down by $21.80 to settle at $886.10 a troy.

Best day for US Market in four months


Drop in crude prices and Fed’s latest directive on economy give stocks the required boost

It was the best day for US Market in almost four months time today, Tuesday, 05 August, 2008 as stocks rallied right out of the gate since the opening bell. The indices traded in the green for the entire day and the Dow and the Nasdaq posted their biggest one days gains in a long long time. The broad-based rally was aided by favorable wording in the Fed's latest directive, a drop in crude prices and a better-than-expected economic reading on the services sector. All the ten sectors ended in the green today led by the financial sector.

The Dow Jones industrial Average ended the day with a huge gain of 331 points at 11,615.7. The Nasdaq Composite Index, finished higher by 64.2 points at 2,349.3. S&P 500 finished higher by 35.8 points at 1,284.88.

Twenty nine out of thirty Dow components ended in the green today led by AIG and Boeing. The two stocks ended 12% and 6% higher today. P&G was also one of the front runners today following its good earning report.

Today, The Federal Open Market Committee (FOMC) left the fed funds rate at 2%, and the discount rate at 2.25%, as expected. The Fed noted that there are both risks to inflation and growth. The FOMC said that although the economy grew in the second quarter, labor markets have "softened further" and financial markets remain under "considerable stress." The Fed gave no sign that it plans to change policy in the foreseeable future.

In terms of economic news, The July Institute of Supply Management (ISM) Services report indicated that business conditions aren't as weak as widely reported, although conditions are still not ideal. The reading rose to 49.5 from 48.2 in June, which topped the average estimate of 48.8.

Also a report showed that European retail sales declined by the most in at least 13 years in June. Surge in oil and food costs left consumers with less money to spend on other goods.

In earnings news, Procter & Gamble topped estimates as the company reported a 33% growth in profits.

The financial sector provided good leadership throughout the session today, indirectly benefiting from a healthy advance in European banks after Paris-based Societe Generale reported better-than-feared earnings. AIG led the surge among Dow components ending higher with a gain of 12% after being upgraded to Buy from Neutral at UBS.

Barring Rediff.com and MTNL, all the Indian ADRs ended in the green today. HDFC Bank and ICICI Bank were the largest gainers soaring 11% and 15% respectively.

Crude prices ended substantially lower today as the dollar strengthened and demand concerns fuelling from slower economic growth in US and Europe. Prices closed below $120 level for the first time in three months. Oil prices also fell as Tropical Storm Edouard was unlikely to have disrupted oil and natural-gas facilities in the Gulf of Mexico.

Crude-oil futures for light sweet crude for September delivery closed at $119.17/barrel (lower by 2.24 or 1.8%) on the New York Mercantile Exchange. Futures earlier fell to an intraday low of $118 a barrel. Last week, crude prices ended higher by 1.5%. But it has lost 4.8% since last Friday. Crude lost $15.92 (11%) in July, 2008, the biggest ever in dollars. It's now $28 lower than the $147.27 record high hit last on 10 July, 2008.

Trading volumes showed 1.4 billion shares trading on the New York Stock Exchange and 757 million trading on the Nasdaq stock market. Gainers topped decliners by a margin of 3 to 1 on the NYSE and 2 to 1 on the Nasdaq.

For tomorrow, the main focus will be the widely anticipated weekly crude oil inventory report from the Department of Energy. Other than that, there will be earning reports including one from Freddie Mac.

Trading Call - Reliance Capital


Buy Reliance Capital SL - Rs 1390 Target - Rs 1445

Trading Call - Indian Bank


Buy Indian Bank SL - Rs 104 TARGET > Rs 152

Model Portfolio - Aug 6 2008 - Update


Model Portfolio - Aug 6 2008 - Update

Morning Call - Aug 6 2008


Market Grape Wine :

In House :

Nifty at a support of 4452 and 4380 levels with resistance at 4565 and 4635 levels .

Buy : RPL above 174 target 180 s/l of 171.5

Buy : RelCap above 1407 target 1450 s/l of 1390

Buy : in F&O RelCap above 1417 target 1500 s/l of 1390

Buy : in F&O Axis Bank above 767 target 810 s/l of 750

Buy : Posiitonal buy : J&KBank , BombayDye & SCI







Out House:

Markets at a support of 14786 & 14848 levels with resistance at 15252 & 15491 levels .

Buy : Infy & satya

Buy : Lupin & Ranbaxy

Buy : Adalbs & RPower

Buy : SesaGoa & Tisco

Buy : RELInfra & RelCap

Buy : LNT & Bhel

Buy : IBulls & IBreal

Buy : Core project & Aftekinfo

Buy : SBIN & IciciBank

Buy : RComm & Bharti

Buy : JaiBalaji & GujNre coke bullet

Dark Horse : RelCap , Jaibalaji , Tisco , Aftek , RIL , SBIN , Core & Adlabs

Daily Trading Calls - Aug 6 2008


Nifty (4503) Sup 4450 Res 4620

Buy Bharti (839) SL 831
Target 853, 858

Buy Tata Motors (409) SL 404
Target 419, 422

Buy HDFC (2465) SL 2440
Target 2515, 2525

Buy Nagarjuna Con (135) SL 131 Target 142, 145

Buy Omaxe (136) SL 132
Target 143, 146

Enjoy the rhythm and lighten your positions


Rhythm is the basis of life, not steady forward progress…

After wild swings, the bulls seem to have things coming their way for the time being. With the Fed expectedly leaving rates steady, markets world over are enjoying the advance except for Hong Kong where stock market trading is closed as the outer bands of Severe Tropical Storm Kammuri threatens winds with speeds of 63 kilometers per hour or more.

The Indian market will pick up where it ended on Tuesday and open with a slight gap up. Use these gains to lighten your position. Instead of thinking slow and steady wins the race remember to exit fast when things appear steady.

The Federal Reserve left its key fed funds rate unchanged at 2%. The Fed said "economic activity expanded in the second quarter, partly reflecting growth in consumer spending and exports," and that it expects "moderate economic growth" over time. The Fed statement also said inflation "has been high" and remains a "significant concern."

Besides the balancing comments from the Fed, the cooling of crude may have led to the rally on Wall Street. We actually expect crude prices to turn choppy today as the US government releases its weekly energy inventory report. Moreover, Freddie Mac is due to report quarterly results before the opening bell in the US market. These developments may not keep the bulls in control for long.

Light, sweet crude for September delivery fell $2.24 to settle at $119.17 on the New York Mercantile Exchange. In the US markets, stocks skyrocketed with oil prices cooling and Fed’s words soothing for now.

The Dow Jones rose 2.9%, or 331 points. AIG, Bank of America and led gainers, while Chevron was the only Dow stock to fall. The broader Standard & Poor's 500 index was up 2.9%. The Nasdaq composite index rose 2.8%. Cisco Systems posted fiscal fourth-quarter earnings and revenue that topped analysts' forecasts.

Back home, on Tuesday, FIIs were net sellers of equities worth Rs3.97bn while domestic institutional investors were net buyers of equities worth Rs2.87bn, according to the provisional data released by BSE and NSE.

The Securities and Exchange Board of India (Sebi) has received proposals from three entities to set up currency futures in the country.

Tata Power Ltd. is reportedly among the six bidders for Singapore's Senoko Power, a report stated adding that Singapore's largest power utility, may be sold
for more than $3 billion.

Reports say oil producers may have to share the additional revenues earned by them as a result of sharp increase in oil prices, if the suggestions of a high-powered committee headed by Mr B.K. Chaturvedi, Member, Planning Commission, get accepted. Refiners have been excluded from such a levy, the report stated.

Bulls regained its hold over the Indian bourses reversing Monday’s losses. Markets started off on a flat note, however, slowly gained momentum as the day progressed. Buying activity further intensified following a sharp slide in crude oil prices. Crude Oil prices declined to touch a 3-month low of US$118 per barrel.

The rally was led by interest rate sensitive stocks. He banking stocks were in demand on expectations that the US Federal Reserve might keep interest rates untouched in today’s meeting. Like wise, even the Realty and the Auto stocks witnessed buying interest.

Finally, the benchmark Sensex ended 383 points higher to close at 14,961 and Nifty rallied 107 points to close at 4,502.

Ranbaxy lost ground and slipped by 1.5% to Rs516. Reports stated that Daiichi Sankyo Co., secured approval from the Indian Regulator SEBI to purchase shares in two local companies.

Daiichi Sankyo agreed on June 11, 2008 to buy the 34.8% stake of Ranbaxy from the founding Singh family and a portion of about US$1bn of preferential stock. Daiichi Sankyo must also offer to buy a further 20% from shareholders, under Indian takeover rules.

Ranbaxy announced that Daiichi open offer would start on August 16 and would close on September 04, 2008. The scrip touched an intra-day high of Rs542 and a low of Rs448 and recorded volumes of over 24,00,000 shares on NSE.

BHEL gained by 3.2% to Rs1770 after the company announced that it secured Rs25bn from Andhra Pradesh government for 800MW supercritical boilers. The scrip touched an intra-day high of Rs1777 and a low of Rs1711 and recorded volumes of over 4,00,000 shares on NSE.

Shares of Sesa Goa slipped by 6% to Rs3336 as reports stated that government may ask iron ore miners to sell the steelmaking raw material through long-term contracts instead of in the immediate-delivery market to curb inflation.

The committee of secretaries reviewing prices of essential commodities has decided that high-grade iron ores should be made available to steelmakers at reasonable prices to check prices, reports added. The scrip touched an intra-day high of Rs3560 and a low of Rs3300 and recorded volumes of over 3,00,000 shares on BSE.

Nagarjuna Construction surged by over 4% to Rs134 after the company announced that it secured contract worth Rs4.4bn. The scrip touched an intra-day high of Rs136 and a low of Rs129 and recorded volumes of over 11,00,000 shares on BSE.

Aban Offshore edged higher by 0.3% to Rs2575 after the company announced that it received a Letter of Intent for deployment of the new built jack-up rig "Deep Driller 8" offshore India for a two firm well + two optional well program.

The firm period of the contract, is likely to last for 150 days with estimated revenue of US$30mn during the firm period. The scrip touched an intra-day high of Rs2639 and a low of Rs2565 and recorded volumes of over 78,000 shares on BSE.

Shares of Hindustan Motors rallied by over 4.5% to Rs28.2 after media reports stated that it would launch small commercial vehicle shortly. The scrip touched an intra-day high of Rs28.9 and a low of Rs26 and recorded volumes of over 12,00,000 shares on BSE.

Shares of Ashok Leyland rallied by over 9.5% to Rs21.8 after the company posted July sales at 6,202 units (up 11.2%) and July exports rose by 29.6% to 700 units. The scrip touched an intra-day high of Rs33 and a low of Rs28 and recorded volumes of over 53,00,000 shares on BSE.

- Bharti rejigs top management to focus on emerging business (ET)
- GMR Infra in race for development of Russai’s third largest airport at St Petersburg (ET)
- Reliance Infra expects borrowing cost to rise 200 bps (ET)
- JSW Steel not to increase prices this month (BS)
- Bajaj Auto-Renault deal limited to ultra low-cost car project (ET)
- BHEL bags first order to supply 800 mw supercritical units (ET)
- HCL Tech plans to invest US$3.2mn in a new delivery centre in North Carolina, US (ET)
- NTPC has signed a MoU for undertaking renewable power generation activities (ET)
- Thermax designs boiler to covert waste into usable energy (BL)
- GAIL to invest about Rs7.69bn in oil and gas exploration in India and abroad (BS)
- IOC to close three refinery units in Gujarat for maintenance from the last week of August (DNA)
- Satyam Computers is in acquisition talks with at least two firms in sports vertical (DNA)
- Power Ministry approves NTPC-BHEL venture (FE)
- ONGC scales up gas production in Tripura (FE)
- Aban Offshore receives contract to drill two wells and for two optional well programmes worth US$30mn (DNA)
- Coal India to offer 18 old mines for extracting coal in JV against its earlier decision to offer 26 mines (ET)
- NMDC seeks 50:50 JV with Rio Tinto to bid for global mining assets (BS)
- Aurobindo Pharma get final approval from US FDA to manufacture and market alendronate sodium tablets (BS)
- Nagarjuna Constructions bags new contracts worth Rs4.43bn (BS)
- Polaris sings a professional services agreement with AIG Global Services (ET)
- JSW Energy to invest Rs4.75bn in state project (BS)
- Coal India eyes mines in Mozambique and Indonesia (DNA)
- SCI receives navratna status (BL)
- Amara Raja Group to realign business by setting-up a holding company (BL)
- MMTC is scouting for strategic partners for its proposed SEZ (ET)
- Hindustan Motors to enter CV segment with the launch of a small truck shortly (DNA)
- Orient Papers to foray into newer domestic markets for its cement business (ET)
- Hindustan Copper receives miniratna status (DNA)
- State-owned NHPC gets Board approval for initial public issue (BS)
- AFL Logistics may offload 25% to PE investors (ET)
- IOL Netcom to raise US$20mn through GDR issue (DNA)

Economy Front page

- US Fed holds federal funds rate at 2% (ET)

- Crude oil hits 3-month low of US$118/barrel (BS)

- Oil Ministry demands oil bonds in advance for the second and third quarter of the current fiscal (BS)

- FDI in real estate may touch US$25bn in 10 years, as per Assocham (ET)

- Empowered Group of Ministers is considering allowing health insurance companies to be set-up with a start-up capital of Rs500mn (ET)


Market Outlook - Aug 6 2008


Market Outlook - Aug 6 2008

Daily Technicals - Aug 6 2008


Daily Technicals - Aug 6 2008

ITC Ltd


ITC Ltd

Auction - Allotment - 3G Spectrum


Auction - Allotment - 3G Spectrum

Earnings Review - Aug 6 2008


Earnings Review - Aug 6 2008

Today's Pick - Canara Bank


We recommend a buy in Canara Bank from a short-term perspective. It is clearly evident from the charts of Canara Bank that it was on an intermediate-term downtrend, forming lower peaks and troughs, from its 52-week high of Rs 421 recorded in early January.

However, this downtrend got arrested at the support level at Rs 160 level in mid-July and the stock reversed direction. The stock has been on a short-term uptrend since mid July.

While trending up, the stock crossed over 21- and 50-day moving averages successively. On August 5, the stock decisively broke through the resistance level of Rs 200 by surging 7 per cent.

We notice good volume on advance days of the up move. The daily momentum indicator is featuring in the bullish zone. Moreover, the daily moving average convergence and divergence has entered in to the positive territory, reinforcing bullish momentum.

We are positive on the stock in the short-term horizon. We anticipate the stock to move up until it hits our price target of Rs 240 in the forthcoming trading sessions. Traders with short-term perspective can buy the stock while maintaining a stop-loss at Rs 201.

RNRL, RLL August 2008 futures at premium


Turnover increases

Nifty August 2008 futures were at 4533.10, at a premium of 30.25 points as compared to spot closing of 4502.85. NSE's futures & options (F&O) segment turnover was Rs 52,692.78 crore, which was higher than Rs 43,364.62 crore on Monday, 5 August 2008.

Reliance Natural Resources (RNRL) August 2008 futures were at premium at 106 compared to the spot closing of 104.95.

Ranbaxy Laboratories (RLL) August 2008 futures were at premium at 517.50 compared to the spot closing of 516.75.

DLF August 2008 futures were at discount at 549.60 compared to the spot closing of 552.10.

In the cash market, the S&P CNX Nifty gained 107.50 points or 2.45% at 4502.85.

Bullion metals turn further pale


Gold gives up more than $36 in last three sessions

Bullion metal prices registered substantial losses for the third straight day on Tuesday, 05 August, 2008 after the crude prices slipped by almost $3 and US dollar strengthened. These factors reduce the appeal of the precious metal as a hedge against inflation. Gold prices have thus given up almost $36 in its last three sessions. Silver prices also fell for the day.

Generally, a stronger dollar pressures demand for dollar-denominated commodities, such as crude oil and gold, which become more expensive for holders of other currencies. On the other hand, a lower dollar pushes up precious metal prices as their demand lessens as it becomes cheaper for traders holding other currencies.

Comex Gold for December delivery fell $21.8 (2.4%) to close at $886.1 ounce on the New York Mercantile Exchange. It rose to an intraday high price of $903 earlier. Last week, it ended lower by 2.1%. On 17 March, 2008 prices had skyrocketed to a high of $1,034/ounce. But prices have dropped since then.

This year, gold prices have gained 6% till date against a 8% drop for the dollar against the euro. Gold ended July, 2008 lower by $11 (1.1%). The yellow metal ended second quarter with a marginal gain of 0.7%. It ended June, 2008 with a gain of 4.1%. In May, it ended with a gain of higher by $22.5 (2.5%). Before May, in April, prices closed lower by 6.3%. For first quarter prices gained 10.7%. In January, prices gained 11%, the highest monthly gain since April 2006. For February, it gained 6%. But in March, prices succumbed and fell by 5.5%.

On Tuesday, Comex silver futures for September delivery fell 56.8 cents (3.3%) to $16.572 an ounce. Silver has gained 12% in 2008 till date. It ended July 2008 with a gain of 3%. For the second quarter, it had gained a paltry 1.4%. Silver had gained 16% in Q1. The metal also had gained for seven straight years.

At the currency markets on Tuesday, the dollar reached a seven-week high against the euro on speculation that the Federal Reserve will raise its benchmark interest rate later this year to contain inflation. Fed kept the interest rate unchanged at 2% today. The dollar index, a measure of the greenback against a trade-weighted currency basket, was at 73.92, against last closing of 73.485.

Today, The Federal Open Market Committee (FOMC) left the fed funds rate at 2%, and the discount rate at 2.25%, as expected. The Fed noted that there are both risks to inflation and growth. The FOMC said that although the economy grew in the second quarter, labor markets have "softened further" and financial markets remain under "considerable stress." The Fed gave no sign that it plans to change policy in the foreseeable future.

At the crude market on Tuesday, crude oil fell, closing below $120 a barrel for the first time in three months, amid signs demand may be curtailed by slowdowns in the U.S. and European economies. Gasoline also fell to the lowest since May. Crude oil for September delivery fell $2.24 (1.8%) to settle at $119.17 a barrel.

The weakening dollar and higher global demand for raw materials have led to records this year for commodities including gold. Gold has traditionally been used as a safe-haven asset against rising inflation. Investor sentiments are boosted by the fact that gold and silver are alternate sources of good investment in the face of declining dollar and rising energy prices.

Gold had witnessed the greatest annual gain in twenty eight years by gaining $200/ounce (31%) in FY 2007 as lower interest rates had sent the dollar tumbling, and crude-oil prices rose to a record. Silver had climbed 16% in FY 2007. In 2006, silver had jumped 46% while gold gained 23%.

At the MCX, gold prices for October delivery closed lower by Rs 257 (2.1%) at Rs 12,163 per 10 grams. Prices rose to a high of Rs 12,379 per 10 grams and fell to a low of Rs 12,125 per 10 grams during the day’s trading.

At the MCX, silver prices for September delivery closed Rs 588 (2.4%) lower at Rs 23,392/Kg. Prices opened at Rs 23,901/kg and fell to a low of Rs 23,315/Kg during the day’s trading.

Crude continues to lose big


Prices drop by almost $3 on demand concerns from Europe and US

Crude prices ended substantially lower on Tuesday, 05 August, 2008 as the dollar strengthened and demand concerns fuelling from slower economic growth in US and Europe. Prices closed below $120 level for the first time in three months. Oil prices also fell as Tropical Storm Edouard was unlikely to have disrupted oil and natural-gas facilities in the Gulf of Mexico.

Crude-oil futures for light sweet crude for September delivery closed at $119.17/barrel (lower by 2.24 or 1.8%) on the New York Mercantile Exchange. Futures earlier fell to an intraday low of $118 a barrel. Last week, crude prices ended higher by 1.5%. But it has lost 4.8% since last Friday. Crude lost $15.92 (11%) in July, 2008, the biggest ever in dollars. It's now $28 lower than the $147.27 record high hit last on 10 July, 2008.

The July Institute of Supply Management (ISM) Services report indicated that business conditions aren't as weak as widely reported, although conditions are still not ideal. The reading rose to 49.5 from 48.2 in June, which topped the average estimate of 48.8. Since the reading is below 50, it reflects contraction in the services sector and this is what fuelled worries among traders.

Also a report showed that European retail sales declined by the most in at least 13 years in June. Surge in oil and food costs left consumers with less money to spend on other goods.

These reports fuelled concerns that forthcoming demand for oil and crude products from the largest consumer of oil, US and Europe might be dampened in the forthcoming months and hence prices slipped today.

Crude prices gained 38% in the second quarter of this year. It was the biggest quarterly increase in nine years. It ended June 2008 higher by 9.9%. Prices are 52% higher than a year ago. For the year, crude is up by 26% till date.

At the currency markets on Tuesday, the dollar reached a seven-week high against the euro on speculation that the Federal Reserve will raise its benchmark interest rate later this year to contain inflation. Fed kept the interest rate unchanged at 2% today.

Today, The Federal Open Market Committee (FOMC) left the fed funds rate at 2%, and the discount rate at 2.25%, as expected. The Fed noted that there are both risks to inflation and growth. The FOMC said that although the US economy grew in the second quarter, labor markets have "softened further" and financial markets remain under "considerable stress." The Fed gave no sign that it plans to change policy in the foreseeable future. The dollar index, a measure of the greenback against a trade-weighted currency basket, was at 73.92, against last closing of 73.485.

Against this background, September reformulated gasoline slid 4.4 cents, or 1.5%, to close at $2.9564 a gallon, and September heating oil dipped 6.8 cents, or 2%, to end at $3.282 a gallon.

Natural gas was little changed today, erasing an earlier advance, amid speculation a slowing U.S. economy will cut demand for the industrial and heating fuel. Natural gas for September delivery was unchanged to settle at $8.726 per million British thermal unit.

At the MCX, crude oil for August delivery closed at Rs 5,057/barrel, lower by Rs 69 (1.3%) against previous day’s close. Natural gas for August delivery closed at Rs 370.7/mmbtu, higher by Rs 0.8/mmbtu (0.1%).

India Strategy, Federal Bank


India Strategy, Federal Bank

Eveninger - Aug 5 2008


Eveninger - Aug 5 2008

Bank of Baroda, India Cements, Cairn, GSK Consumer, GAIL, Godhavari Power, Adhunik Metalliks


Bank of Baroda, India Cements, Cairn, GSK Consumer, GAIL, Godhavari Power, Adhunik Metalliks

TCS - 2007-2008 - Annual Report


TATA CONSULTANCY SERVICES LIMITED

ANNUAL REPORT 2007-2008

DIRECTOR'S REPORT

To The Members,

The Directors submit the Annual Report of the Company together with the audited statement of accounts for the year ended March 31, 2008.

1. Financial Results:

Financial Year

2007-2008 2006-2007 (Rs. in crore) (Rs. in crore)

(i) Income from Sales and Services 18533.72 14939.97

(ii) Other Income 445.95 216.55

(iii) Total Income 18979.67 15156.52

(iv) Operating Expenditure 13513.61 10639.00

(v) Profit before Interest, Depreciation and Tax 5466.06 4517.52

(vi) Interest 3.42 3.43

(vii) Depreciation 458.78 343.41

(viii) Profit before Taxes 5003.86 4170.68

(ix) Provision for Taxes 495.10 413.39

(x) Net Profit for the Year 4508.76 3757.29

(xi) Balance Brought Forward from Previous Year 4919.99 2833.30

(xii) Amount Available for Appropriation 9428.75 6590.59

Appropriations:

(a) Interim Dividends on Equity Shares 880.74 733.95

(b) Proposed Final Dividend on Equity Shares 489.31 391.44

(c) Proposed Dividend on Redeemable Preference Shares 0.08 -

(d) Tax on Dividends 232.85 169.48

(e) General Reserve 450.88 375.73

(f) Balance carried to Balance Sheet 7374.89 4919.99

(1 crore = 10 million)

2. Issue of Redeemable Preference Shares and change in Authorised and Paid-up Share Capital Pursuant to the resolution passed by the Members under a Postal Ballot, the results of which were announced on March 21, 2008, the Authorised Share Capital of the Company has increased from Rs.120,00,00,000/- to Rs.220,00,00,000/- by the creation of 100,00,00,000 Redeemable Preference Shares of Re.1/- each. Further, all the Redeemable Preference Shares aggregating Rs.100,00,00,000/- have been allotted to the Promoters, Tata Sons Limited on March 28, 2008. This resulted in the paid-up share capital of the Company increasing from Rs.97,86,10,498/- to Rs.197,86,10,498/- consisting of 97,86,10,498 Equity Shares of Re.1/- each and 100,00,00,000 Redeemable Preference Shares of Re.1/- each.

3. Dividend:

Based on the Company's performance, the Directors are pleased to recommend, for approval of the Members a Final Dividend of Rs.5/- per share on 97,86,10,498 Equity Shares of Re.1/- each of the Company for the financial year 2007-08. The Final Dividend on the Equity Shares, if declared as above, would involve an outflow of Rs.489.31 crore towards dividend and Rs.83.18 crore towards dividend tax, resulting in a total outflow of Rs.572.49 crore. The total outflow on dividend on Equity Shares of the Company for the year 2007-08 would translate to 35.55% of the profits of the Company. A table on the dividends paid by the Company on Equity Shares during the year and during the previous year is given below:

(Rs. in Crore)

2007-08 No. of Dividend Dividend Dividend Total shares per Amount Tax Outflow share (Rs.)

First Interim 97,86,10,498 3.00 293.58 49.89 343.47Dividend

Second Interim -do- 3.00 293.58 49.89 343.47Dividend

Third Interim -do- 3.00 293.58 49.89 343.47Dividend

Sub-total - - 880.74 149.67 1030.41

Final Dividend 97,86,10,498 5.00 489.31 83.18 572.49

Total - 14.00 1370.05 232.85 1602.90

(Rs. in Crore)

2006-07 No. of Dividend Total shares per share Outflow (Rs.) (incl. Dividend Tax)

First Interim 48,93,05,249 3.00 167.38Dividend

Second Interim 97,86,10,498 3.00 334.76Dividend

Third Interim -do- 3.00 334.76Dividend

Sub-total - - 836.90

Final Dividend 97,86,10,498 4.00 457.97

Total - 1294.87

The Redeemable Preference Shares which have been allotted on March 28, 2008 are entitled to pro-rata dividend for the year 2007-08, from the date of their allotment. The Redeemable Preference Shares are entitled to a fixed cumulative dividend of 1% per annum and a variable non-cumulative dividend of 1% of the difference between the rate of dividend declared during the year on the Equity Shares of the Company and the average rate of dividend declared on the Equity Shares of the Company for the three years preceding the year of issue of the said Redeemable Preference Shares. Accordingly, the Directors have recommended, for approval of the Members, a Dividend of Re.0.07 per share on 100,00,00,000 Redeemable Preference Shares of Re.1/- each on a pro-rata basis for the Financial Year 2007-08.

4. Transfer to Reserves:

The Company proposes to transfer Rs.450.88 crore to the General Reserve out of the amount available for appropriations and an amount of Rs.7374.89 crore is proposed to be retained in the Profit and Loss Account.

5. Operating Results and Business:

The Company continued to see strong and profitable growth in the financial year 2007-08 across all markets driven by good performance in existing and new areas of business.

For the year ended March 31, 2008, the Company earned a total income of Rs.18979.67 crore, an increase of 25.22 % over previous year's Rs.15156.52 crore. As per the Consolidated Accounts the total income was Rs.23349.45 crore, an increase of 23.45% over the previous year's Rs.18914.26 crore.

The net profit of the Company for the year increased to Rs.4508.76 crore (23.76% of the total income) as compared to Rs.3757.29 crore (24.79% of total income) in the previous year. As per the Consolidated Accounts the net profit for the year was Rs.5026.02 crore (21.53% of total income) as compared to Rs.4212.63 crore (22.27% of total income) in 2006-07.

The Company is among the leading global IT companies, and continues to retain its leadership position in the Indian IT Industry. It has continued to win new engagements and grow existing relationships in the traditional area of Application Development and Maintenance and is strengthening its presence in areas such as Consulting, Infrastructure Management Services, Asset Based Solutions, Engineering & Industrial Services, IT Enabled Services, Assurance and Business Intelligence Services. The broad range of services enables the Company to provide 'end-to-end' services to its clients, in line with its position as a Global IT and Consulting Services company. Combined with its Industry focus and its geographical spread, the Company is able to provide comprehensive and high value added services to its clientele.

The Company has been growing at a substantial pace. With Revenues at Rs.18533.72 crore for the year ended March 31, 2008, TCS has, over the last four years as a listed company, recorded a CAGR of 23.8%. Considering the need to deepen relationships with customers in each Industry segment, to acquire new customers in markets where TCS is already a significant force and to expand in emerging markets, the Company has during the year, chalked out a new strategy and has realigned its operating structure. The revised organisational operating structure paves the way for more accountability and performance and there is a P&L responsibility cast on Heads of Operations. These measures will help the Company to retain its leading position amidst growing intense competition globally.

The Company's Indian and global operations have shown growth. In India, the Company is also partnering with the Central and various State Governments in many e-governance initiatives, some of which have won accolades. The Company/its subsidiaries have won many high-value and strategic contracts in India and across the globe.

The Company's continued investments in innovation and technology have enabled it to undertake a number of large, end-to-end, mission critical projects in diverse business areas and technology domains.

The Company has 155 offices globally. In addition, the Company also has Delivery Centres in a number of countries. Major Delivery Centres outside India are in Hungary, Brazil, Chile, Uruguay and China. During the year, the Company has opened a Centre in Cincinnati, USA, and a large centre in India at Hyderabad and laid the foundation for a large centre in Pune. The Company services the needs of its global clients by linking the clients to one or more of these Delivery Centres. Through the establishment of Delivery Centres in different parts of the globe with the same high quality processes and by enabling customers to make use of a group of these Centres depending on their needs, the Company enables each of its customers to Experience certainty, which has been the theme of its branding exercise during the year. TCS has pioneered the Global Network Delivery ModelTM, which the customers see as a key differentiator.

USA continued to be the largest market and contributed 50.77% to the Company's consolidated revenues while other established markets like the UK and Europe contributed 28.99% of the consolidated revenues. The Company's decision to invest in emerging markets like Latin America and Asia Pacific is yielding results with these markets contributing 4.40% and 5.20% respectively to the consolidated revenues of the Company. India remains a strategic market for the Company and continues to demonstrate growth in absolute terms.

Diligenta Limited, the Company's subsidiary in the UK, which was set up in 2005-06 to focus on services in the life insurance and pensions BPO market in the UK, has expanded its services and has signed another contract of significant importance. Tata Consultancy Services (China) Co. Ltd, the strategic joint venture supported and promoted by National Development and Reforms Commission (NDRC) has also been acquiring new customers. These customers are either multinationals with significant operations in China or large Chinese enterprises. During the short period that TCS has been in operation in China, it has created a good track record of executing projects and developing a highly productive local work force. The synergy between the various subsidiaries of the Company and the competitive advantage in terms of niche products and services of the subsidiaries which have been acquired in the past couple of years are yielding results in making the TCS Group of Companies providers of end-to-end comprehensive solutions.

Among the industry verticals, the banking, financial services and the insurance sector contributed 44.14% of consolidated revenues on the back of large product-based engagements in core banking and strong demand for the Company's capital markets and insurance products and solutions. The manufacturing sector, which contributed 9.82% of the Company's consolidated revenues, is being driven by demand for enterprise solutions like ERP and engineering services. Other significant verticals include life sciences & healthcare, retail, telecom and utilities. A significant number of existing customers are now engaging the Company for more than one service offering.

6. International Credit Rating:

The Company continues to have from Moody's Investors Services, an investment-grade issuer rating of A3 as well as an indicative foreign currency debt rating of Baa1, with the ratings outlook as stable. The rating is not for any specific debt issuance by TCS.

The Company has also been rated by Dun & Bradstreet at 5A1 (Condition-Strong). The rating is assigned on the basis of tangible networth and a composite appraisal of the Company.

Standard and Poor's Ratings Services has assigned to the Company its BBB' corporate credit rating with outlook as Positive.

7. Branding Initiative:

The Company launched a major brand building initiative during 2007-08 in order to articulate and propagate its new brand positioning. The advertising campaign was launched across prestigious Indian and international magazines and newspapers, as well as online channels, in order to increase the profile of the Company in the global marketplace.

The brand rollout was also carried out internally within the Company, to align the large and diversified workforce of the Company with the brand promise of 'Experience certainty'.

8. Strategic Acquisitions and Alliances:

With the objective of moving towards its goal of being among the top IT companies in the world, the Company has made acquisitions/alliances during the past few years either directly or through its subsidiaries. Companies with track record of successful implementation of large and complex key technology projects, companies with niche products, services, domain knowledge and expertise have been acquired. Strategic alliances have also been entered into in India and abroad. The Company has effectively synergised the capabilities and expertise of the various subsidiaries, acquired entities and strategic alliances and is benefiting from the same. With these strategic acquisitions and alliances, the Company has been able to expand its product and services portfolio and is leveraging these combined strengths to consolidate its position in existing markets, to enter new geographies and new client verticals. TCS B NCS Core Banking which has been positioned in the Leaders quadrant of Gartner's 'Magic Quadrant for International Retail Core Banking, 2008' illustrates this point.

The Company has, with these measures, succeeded in leveraging the complementary strengths of its partners in technology, software development, management, talent acquisition and training. These coupled with the world-class processes and practices of TCS as well as TCS' experience in handling large and industrial scale technology projects, are expected to further strengthen TCS' leading position in the international arena.

9. Human Resource Development:

TCS continues to be recognised for its good human resources practices. This year the Company won the Data Quest Best IT Employer of the Year award for the fourth consecutive time. TCS also received the RASBIC - Recruitment and Staffing Best in Class award for the second consecutive year. In this high-growth industry, TCS continues to be the employer of choice, marked by the lowest attrition rate of 12.6%. The Company has a diverse employee base and is truly global with over 108,000 employees from 62 nationalities. This heterogeneous base is central to sustaining the Company's competitive edge. At the end of the year, non-Indian nationals working for the Company were 9.1% out of the total employee base. The percentage of women working for the Company increased to 28% from 26% last year. During the year, the Company added a net of 22,116 persons through recruitment. The Company's recruitment practice ensures that suitable candidates with merit are recruited and provided with the right opportunities. The Company received over 11.50 lakh applications for employment during the year.

The HR function in TCS has been re-aligned and closely integrated with business units in order to support operational agility, to be scalable for the Company's future growth, as well as to achieve higher employee satisfaction. Going forward, the new structure will support greater focus for strategic initiatives and also provide more leadership growth in the Company.

In an organisation like TCS where Employees come from various nationalities and ethnicities, understanding other cultures is extremely important, as this translates into better understanding of the global clients. TCS pioneered the concept of a Global Village' which is an event essentially providing employees with an opportunity to discover and learn about other cultures. The essence of Global Village is a display of cultures and traditions, country presentations, national costumes, dances, food, in short, everything defining a country.

TCS encourages its employees to seek personal growth and a higher meaning to life, by providing platforms for creativity, expression and social initiatives like Music Club, Yoga Groups, Environment Awareness Sessions, Theatre Workshops, etc. The workplace harmony and bonding that such initiatives build have long-term beneficial effects for both the Company as well as its internal stakeholders.

10. Interface with Academia:

The pioneering effort of TCS in bridging the gap between the Academia and the Industry continues in full swing. This year, TCS conducted a course on 'Information System Auditing and Control' for the MBA program of IIT- Chennai.

In October 2007, TCS organised the 9th Annual TCS Academic Interaction Meet where 65 academic leaders, including academicians from Uruguay, Brazil, China, Singapore and USA had invigorating interactions on various issues facing the industry and the academic world.

11. Quality Initiatives:

Reinforcing its commitment to high levels of quality, best-in-class service management and robust information security practices, the Company attained a number of milestones during the year.

TCS was re-assessed, enterprise-wide, at maturity level 5 of the CMM(R) v1.2 model. TCS was also recommended enterprise-wide for continuation of the ISO 9001:2000, ISO 27001:2005 and ISO 20000:2005 certification. The audit was a Surveillance Audit for ISO 9001:2000, ISO 27001:2005; ISO 20000-1:2005 and expansion audit for ISO 20000-1:2005 for BPO. TCS also continues to maintain the domain specific certifications AS9100, TL9000 and ISO 13485.

An enterprise-wide appraisal endorses the premise of the integrated Quality Management System (iQMS) to give a consistent delivery experience to TCS' customers across the globe. It re-iterates the customers' expectations to experience a high degree of certainty in service delivery, as TCS stays focused on improving quality and processes constantly in an environment of rapid growth.

Nineteen centres of TCS were also certified for ISO 14001.

ISO 14001: 2004 provides a framework for TCS' environmental initiatives, objectives and targets and helps in continually improving its environmental performance. TCS' commitment to environment stems from the Tata Group's abiding concern for the environment and society. TCS being an IT organisation, its nature of operation has a low impact on the environment. TCS aims to provide a healthy work environment to employees and conduct an environment-friendly business.

TL 9000 is the telecom industry's quality standard that expands the requirements of ISO 9001:20000. This certification provides an opportunity to compare the Company's performance with similar organisations, learn and share best practices in the telecom domain, besides strengthening relationships with customers on a competitive scale.

AS 9100: Rev B is a Quality Management System designed specifically for the Aerospace industry and is based around ISO 9001:2000 standard and has been developed by the Society of Automotive Engineers (SAE).AS 9100: Rev B is being implemented across the international Aerospace industry, by the International Aerospace Quality Group (IAQG). IAQG has been established for the purpose of achieving significant improvements in quality and safety and reductions in cost, throughout the value stream within the Aerospace industry. It includes representation from Aerospace companies in the Americas, Asia Pacific and Europe. ISO 13485:2003 specifies requirements for a quality management system where an organisation needs to demonstrate its ability to provide medical devices and related services that consistently meet customer requirements and regulatory requirements applicable to medical devices and related services.

The above certifications are testimony to TCS' unstinting commitment to achieve the highest standards of quality and the expertise that the company brings to global clients. The cornerstone of these certifications is the in-house developed integrated Quality Management System (iQMS) - a vibrant, process-driven, people-oriented and customer-focussed quality management system which is continuously evolving to cater to the requirements of the Company's varied business offerings and today, is the backbone supporting the Global Network Delivery ModelTM.

Business Excellence for the year 2007-08:

The year 2007-08 was driven by excellence which was evidenced in TCS winning the prestigious Business Excellence Sustaining award from the Tata Group on the JRD QV Awards Nite on July 29, 2007. Based on the feedback received from the TBEM Assessment for the year 2007 several improvement initiatives were undertaken:

1. Lifeline:

TCS continued with renewed vigour the customer satisfaction determination process using its Lifeline process and received a very good response of 70% on the web-enabled survey from the CXO level respondents of its clients.

2. Using External Agency:

After carefully evaluating proposals from 11 world-renowned global organisations, TCS has, selected an independent external agency to carry out the Customer Satisfaction Survey among its Key Customers on a global basis. This is expected to begin towards the end of April 08 and the results are expected by end of June 08.

3. Customer Experience Management:

An integrated Customer Complaints and Appreciation Management process is being implemented through the Company's IPMS system. This is expected to be ready by the second quarter of FY 09.

4. Succession Planning:

With a clear focus on sustaining business growth the need for leadership development was given renewed focus. In the new operating model of the Company all critical positions have been identified and leaders and deputy leaders have been named.

5. Corporate Sustenance:

The CS policy has been formulated with clear themes and processes, and templates have been defined for global deployment. TCS released a report on its CS operations using GRI guidelines.

6. Enterprise Risk Management:

To make ERM processes available globally, a section for ERM was createdon KNOWMAX, the Company's global knowledge management system.

7. Knowledge Management:

This year, TCS made the TATA Knowledge Chain a collaboration portal available to all its 1,00,000 associates on the knowledge management system.

12. Corporate Sustainability:

The focus of Corporate Sustainability (CS) in TCS is on health and education together with diversity, ethical global sourcing and concern for the environment. The differentiator for CS in TCS is the volunteering by TCSers through 'Maitree', while TCS endeavours to use its IT core competence to address societal problems. 'Maitree', an association of employees and their families across the globe, is a key vehicle of CS within the Company. 'Maitree' also addresses TCS' internal stakeholders and engages TCSers and their families in a variety of meaningful activities including music, dance, trekking and sport. In addition to these activities, 'Maitree' creates vehicles for community service and volunteering such as reaching out to the differently abled, AIDS education, and similar initiatives. The initiative at Waze Gram Panchayat near Panvel is now four years old and includes a children's education programme with a science lab, a computer lab powered by renewable energy, women's literacy and healthcare and life skills programme, women's employment generation through sewing programme and a water harvesting programme.

New initiatives include an Advanced Computer Training Centre for the visually impaired that was set up in early 2008 along with MN Banajee Industrial Home for the blind to provide training for the visually impaired in soft skills, BPO specific skills and Infrastructure Services Training (Helpdesk).

In addition to volunteering, some noteworthy on-going CS projects of TCS in India are: * Project mKrishi, to help farmers access localised information and advice on agricultural issues through graphic and voice formats in local languages on mobile phones including capsules of TCS' Adult Literacy programme.

* InsighT, a 72 hour IT and soft skills camp for students of Class 11 (students out of high school studying their pre-university course).

* Rural IT Quiz in collaboration with the Government of Karnataka which saw a record participation of 1.2 million students in 2007.

* TCS IT Wiz, India's largest IT Quiz for urban school students with more than 12,000 students participating across 11 cities.

* The Computer-based Functional Literacy Programme which has served over 1,00,000 learners all over India with its offerings in eight Indian languages. The offering in the ninth language (Kannada) is expected to be completed by end 2008.

* Software for Childline, an organisation that helps children in distress. The software helps linking and monitoring of various Childline centres in India. The improvised version of the software CHILDLINE V.2 integrates new and more powerful functionalities and helps the system which receives more than 2 million calls a year.

* The TCS-EW Teachers Award for teachers from across the country who have exhibited innovative techniques, inspired students and aroused their curiosity.

TCS has been expanding its Corporate Sustainability initiatives within the United States and has participated in projects along with charitable organisations like the United Way and The American Heart Association, and supports educational causes like First Book. During the past year, over 500 TCSers participated in the 'Walk of Hope' in support of breast cancer awareness campaign over seven US cities.

TCS has also very effectively participated in corporate sustenance programmes of its customers, finding common cause with the customer's employees beyond work in areas of common social concerns. Recent instances include, amongst others, the cleaning up of the De Witt Clinton Park in New York, a blood donation drive with Morgan Stanley; support of the Leukemia and Lymphoma Society of Delaware Chapter with AIG.

TCS' involvement in corporate sustainability activities across the globe includes the initiative with the UN World Food Program's Walk of Life across Europe, the Downs Syndrome Association in Singapore and Australia and the Endeavor' initiative in Uruguay for grooming of local entrepreneurs.

TCS' Environment policy and Green procurement policy demonstrate the Company's commitment towards mitigation of its direct and indirect environmental impacts. TCS is aggressively working towards zero waste disposal, and is executing technologies like vermiculture, bio-digestor plants to convert food and garden waste to manure/cooking gas. Nineteen delivery centres are ISO 14001:2004 certified by TUV NORD and three have cleared the adequacy audit. TCS is compliant with applicable and voluntarily adopted environment laws. Being an IT organisation TCS is conscious of its e-waste and ensures environment friendly disposal.

TCS calculates its carbon footprint and takes steps to mitigate the same. The Company also has a Green Office 10-point plan. To reduce greenhouse emissions due to travel by employees to client locations for meetings, TCS promotes the use of video conferencing. TCS is constantly conducting major environment sensitisation drives amongst its employees. TCS is committed towards resource conservation and taking various initiatives to achieve reduction. Rain water harvesting, sewage treatment plants, etc., are being implemented efficiently.

All new TCS facilities are being designed and executed to be environment friendly.

TCS is a member of the Per Cent Club of Business in the Community (BitC) by virtue of its social spends.

TCS has also published its Corporate Sustainability Report 2007 based on GRI 3 Guidelines of the Global Reporting Initiative.

13. Awards/Recognition:

During the year, the Company received various awards and recognitions, significant amongst which are the following:

* National Award for Excellence in Corporate Governance - 2007 from the Institute of Company Secretaries of India.

* Dataquest Best IT Employer for 2007. * Most Admired Knowledge Enterprise (MAKE) Award 2007. * Most Valued Partner - awarded by Cisco's Worldwide Sales Processes and Systems IT.

* BEST Award from The American Society for Training and Development, for the third time.

* Dataquest Best e-Governance Vendor Award. * Silver Band' in UK's BITC Corporate Responsibility Index. * Three Business Partner Excellence Awards at IBM Partner World 2007. * SAP Pinnacle Award in the Industry Solution Go-To-Market category. * Excellence in Education Award from Life Office Management Association Corporate Citizen of the Year - 2007 from the Rotary Club, Chennai Securities Strategist Award. * 2007 Eaton Premier Supplier Award in the Indirect Supplier for Information Technology Services category.

14. Corporate Governance Report and Management Discussion and Analysis Statement:

A report on Corporate Governance is attached to this Report as also a Management Discussion and Analysis statement.

15. Directors' Responsibility Statement:

Pursuant to the requirement of Section 217(2AA) of the Companies Act, 1956 ('Act'), and based on the representations received from the operating management, the Directors hereby confirm that:

(i) In the preparation of the Annual Accounts for the year 2007-08, the applicable Accounting Standards have been followed and there are no material departures;

(ii) They have selected such accounting policies in consultation with the statutory auditors and applied them consistently and made judgements and estimates that are reasonable and prudent so as to give a true and fair view of the state of affairs of the Company at the end of the financial year and of the profit of the Company for the financial year;

(iii) They have taken proper and sufficient care to the best of their knowledge and ability for the maintenance of adequate accounting records in accordance with the provisions of the Companies Act, 1956. They confirm that there are adequate systems and controls for safeguarding the assets of the Company and for preventing and detecting fraud and other irregularities; and

(iv) They have prepared the Annual Accounts on a going concern basis.

16. Subsidiary Companies and Consolidated Financial Statements:

The Company had 56 subsidiaries at the beginning of the year.

The following four subsidiaries were set up during the year: * Tata Consultancy Services Morocco SARL AU.

* Tata Consultancy Services (Africa) (PTY) Ltd.

* TCS Financial Management LLC (set up by Tata America International Corporation).

* Tata Consultancy Services (South Africa) (PTY) Ltd (set up by Tata Consultancy Services (Africa) (PTY) Ltd).

The following subsidiary was de-registered during the year: * IT Consulting Company (formerly known as Tata Consultancy Services France SAS).

During the year, the Company acquired GT Participacoes S.A. which was merged with Tata Consultancy Services Do Brasil Desenvolvimento De Servicos Ltda.

The following subsidiaries were merged during the year with other subsidiaries of the Company: * Swedish Indian IT Resources AB was merged with Tata Consultancy Services Sverige AB. * Tata Consultancy Services Do Brasil Desenvolvimento De Servicos Ltda (formerly known as TCS Brasil S/C Ltda) was merged with Tata Consultancy Services Do Brasil S.A. which is now known as Tata Consultancy Services Do Brasil Ltda.

* TKS Services S.A. was merged with Tata Consultancy Services Switzerland Ltd. (formerly known as TKS - Teknosoft S.A.). * Quartz Software Technology S.A. was merged with Tata Consultancy Services Switzerland Ltd. * Tata Consultancy Services Financial Solutions Ltd (formerly known as TKS - Banking Solutions S.A.) was merged with Tata Consultancy Services Switzerland Ltd.

The following companies have ceased to be subsidiaries due to disinvestment: * Pentacrom S.A.

* Pentacrom Servicios S.A.

Consequently, the Company has 52 subsidiaries as on March 31, 2008.

The names of the following subsidiaries were changed during the year: * Tata Consultancy Services Do Brasil S.A. was changed to Tata Consultancy Services Do Brasil Ltda. * Financial Network Services (Holdings) Pty. Limited was changed to TCS Financial Solutions Australia Holdings Pty Limited * Financial Network Services Pty. Limited was changed to TCS Financial Solutions Australia Pty Limited * TKS - Teknosoft S.A. was changed to Tata Consultancy Services Switzerland Ltd. * TKS Teknosoft (France) SAS was changed to Tata Consultancy Services France SAS.

There has been no material change in the nature of the business of the subsidiaries. A statement containing brief financial details of the subsidiaries is included in the Annual Report.

As required under the Listing Agreements with the Stock Exchanges, a Consolidated Financial Statement of the Company and all its subsidiaries is attached. The Consolidated Financial Statement has been prepared in accordance with Accounting Standards 21, 23 and 27 issued by The Institute of Chartered Accountants of India and show the financial resources, assets, liabilities, income, profits and other details of the Company, its associate companies, its joint ventures and its subsidiaries after elimination of minority interest, as a single entry.

The Company has been granted exemption for the year ended March 31, 2008 by the Ministry of Corporate Affairs from attaching to its Balance Sheet, the individual Annual Reports of its subsidiary companies. As per the terms of the Exemption Letter, a statement containing brief financial details of the Company's subsidiaries for the year ended March 31, 2008 is included in the Annual Report. The annual accounts of these subsidiaries and the related detailed information will be made available to any Member of the Company/its subsidiaries seeking such information at any point of time and are also available for inspection by any Member of the Company/its subsidiaries at the Corporate Office of the Company. The annual accounts of the said subsidiaries will also be available for inspection, as above, at the head offices of the respective subsidiary companies.

17. Fixed Deposits:

The Company has not accepted any public deposits and, as such, no amount on account of principal or interest on public deposits was outstanding on the date of the Balance Sheet.

18. Directors:

During the year, Mr. N. Chandrasekaran and Mr. S. Mahalingam were appointed as Additional Directors and Whole-time Directors (Executive Directors) of the Company with effect from September 6, 2007 and Mr. Phiroz Vandrevala was appointed as Additional Director and Whole-time Director (Executive Director) of the Company with effect from September 7, 2007. Mr. N. Chandrasekaran was also appointed as the Chief Operating Officer while Mr. S. Mahalingam continues to act as the Chief Financial Officer of the Company. The appointments are for a period of five years and are subject to the approval of the shareholders. As per the provisions of Section 260 of the Companies Act, 1956, these Directors hold office only up to the date of the forthcoming Annual General Meeting of the Company. The Company has received notices under Section 257 of the Act along with the requisite deposit, in respect of the above persons, proposing their appointment as a Director of the Company. Resolutions seeking approval of the Members for the appointment of Mr. N. Chandrasekaran, Mr. S. Mahalingam and Mr. Phiroz Vandrevala as Directors and for their appointment as Executive Directors of the Company have been incorporated in the Notice of the forthcoming Annual General Meeting along with brief details about them.

Mr. S. Padmanabhan who was appointed as Additional Director and Whole-time Director (Executive Director) of the Company with effect from September 6, 2007 has moved over as Executive Director of another Tata Company and hence has ceased to be an Executive Director and a Director of the Company with effect from February 6, 2008.

Mr. R.N. Tata and Mr. V. Thyagarajan, Directors, retire by rotation and being eligible have offered themselves for re-appointment.

19. Auditors:

M/s. S.B. Billimoria & Co., Chartered Accountants, who are the Statutory Auditors of the Company hold office, in accordance with the provisions of the Companies Act, 1956, upto the conclusion of the forthcoming Annual General Meeting. M/s. S.B. Billimoria & Co. have communicated that they are not seeking re-appointment at the ensuing Annual General Meeting. The Company has received a special notice from a Member of the Company, in terms of the provisions of the Companies Act, signifying the intention to propose the appointment of M/s. Deloitte Haskins & Sells, Chartered Accountants (DHS), as the Statutory Auditors of the Company from the conclusion of the ensuing Annual General Meeting until the conclusion of the next Annual General Meeting. DHS have also expressed their willingness to act as Auditors of the Company, if appointed, and have confirmed their eligibility. In this regard, attention of the Members is invited to Item No. 6 of the Notice convening the forthcoming Annual General Meeting.

20. Particulars of Employees:

Information as required under Section 217(2A) of the Act, read with the Companies (Particulars of Employees) Rules, 1975, as amended, is given in an Annexure forming part of this report.

21. Conservation of Energy, Technology Absorption, Foreign Exchange Earnings and Outgo:

The particulars as prescribed under section 217(1)(e) of the Act, read with the Companies (Disclosure of Particulars in the Report of Board of Directors) Rules, 1988, are set out in an annexure to this report.

22. Acknowledgements:

The Directors thank the Company's customers, vendors, investors, business associates, bankers and academic institutions for their support to the Company.

The Directors also thank the Government of India and the Governments of various countries, the concerned State Governments and other Government Departments and Governmental Agencies for their co-operation. The Directors appreciate and value the contributions made by every member of the TCS family across the world.

On behalf of the Board of Directors

Place: Mumbai R.N. TataDated: April 21, 2008 Chairman

Annexure to the Directors' Report

Particulars pursuant to Companies (Disclosure of particulars in the Report of Board of Directors) Rules, 1988.

CONSERVATION OF ENERGY:

The operations of the Company involve low energy consumption. Adequate measures have, however, been taken to conserve energy.

TECHNOLOGY ABSORPTION, ADAPTATION AND INNOVATION:

The Company continues to use the latest technologies for improving the productivity and quality of its services and products.

RESEARCH & DEVELOPMENT (R&D):

Specific areas in which R&D was carried out by the Company:

Innovation is a key component of the value proposition to our customers.

Our labs build different innovation capabilities, assets and solutions for our businesses and enable them to add value to our customers' present and future needs.

Software development tools, productivity tools, performance engineering solution frameworks, security frameworks and domain research from our labs deliver 'derivative innovation' that helps our customers get greater value with current offerings in current market segments. Research in Web2.0, Next generation infrastructure management, data privacy, IPTV, sensor networks and other emergent and adjacent technologies deliver 'platform innovation' to our customers. We are exploring new approaches and market opportunities with Mobile Agro Advisory Application (mKrishi), hosted SaaS applications on TCS InstantApps technology, various applications in the life sciences area and in embedded systems and devices. These are examples of 'disruptive innovation' creating radically new approaches and new market segments.

This year the Company's R&D presence has gained a greater global spread. We have launched a new lab in Peterborough in the UK, two in Chennai and have announced our intent to set up a lab in Cincinnati. Our reconstituted Technology Advisory and Research Board has recommended ten themes for innovation in TCS. These themes range from Operational Efficiency and Business Agility to Information Ubiquity, Customer Experience and Environment Friendliness.

TCS' Co-Innovation Network (COIN)T has gained a global footprint in sourcing innovation. We work with start-up partners in the USA, Europe and Asia. Over 130 companies have been engaged through (COIN)T since its inception. We continue linking up to renowned academic institutions, strategic partners, and customers to foster research.

COINT members have congregated in the TCS Innovation fora held in UK, USA and Asia.

Our research initiatives have had their share of awards and recognition this year too. The TCS Java Profiling Solution won the 'Skoch - The World is open' Award and the TCS WAN Emulator Solution won the FOSS Award. Our Adult Literacy Program won the EMPI Indian Express Innovation Award. TCS filed for 26 patents this year. We were granted 17 patents filed in earlier years. With this TCS has 37 patents to its credit and another 100 are in process The launch of the TCS Innovation Awards was an important step towards nurturing a culture of innovation in TCS. Several hundred nominees from across regions, functions and geographies were put through a rigorous selection process and 43 'iOne' Awards (innovators in their first year in TCS), 34 'Yi' winners (young innovators), seven 'Best Innovation Initiative' Awards and two 'Best Innovation Lab' Awards were distributed. We continued to hire high quality research talent into our labs.

Research was continued to be carried out by the company in its 19 innovation labs during 2007-08.

Patents:

Details of patents granted during the year are:

Title/Description Country

1. Method of Quenching India

2. Object Orientation/A method and control system Indiafor enabling user access of data records stored in a relational database in an object Oriented way

3. Apparatus to provide Dynamic Applicability and IndiaSequencing of Business India Rules to help implement client specific negotiations 4. Security Systems for wireless local area network India

5. A benchmark request Injector device for use in IndiaNetwork system

6. A filter media for removal of fluoride ion Indiacontamination from water, a device and a method for purifying fluoride ion contaminated water

7. A filter media for removing arsenic contamination Indiafrom water, a device and a method for purifying arsenic contaminated water

8. Apparatus and method for automatically migrating USAclient server applications to other architectures and platforms

9. An Automated Query Answering System including Indiamethod and Computer Program Product thereof

10. A Technique for Versioning and Configuration USAManagement of Models

11. Method and Apparatus for manufacturing Cement Malaysia

12. Method and Apparatus for manufacturing Cement Indonesia

14. Apparatus and method specifying and IndiaImplementing a declarative way to write rules on objects attributes and Association

15. A Method To Extend AOP with Models India

16. A Process and a system for transmission of data Indiain a multi-carrier orthogonal Frequency division multiplexing (OFDM) Communication system

17. A method for MDD Tool Integration India

Benefits derived:

Customers are able to see the benefits resulting from the Company's R&D efforts and are actively exploring the role that the Company can play in their long-term technology and research options. The past R&D efforts of the Company have resulted in the sale of software licenses and usage of these licenses internally, yielding savings of US$ 12M (R&D Benefits for 06-07 was US$8 M).

Future Plan of Action:

The Corporate Technology Office and the Corporate Technology Board of the Company that govern the R&D and innovation investments of the Company will focus the Company's research efforts on ten outcome oriented themes.

Research will focus on five key IT expectations: * Increase Operational Efficiency* Promote Business Agility* Simplify and Transform* Manage Enterprise Risk and Compliance* Enable Understanding of Markets and Customers

The other five themes of research outcomes will address business, organisational and social goals, in order to:

* Enrich User Experience* Optimise Enterprise Knowledge* Foster Information Ubiquity* Enhance Healthcare* Conserve the Environment

The theme based approach will enhance the customer centricity to research at TCS.

Expenditure on R&D:

(Rs. in crore) Year ended Year ended 31.3.2008 31.3.2007

(a) Capital 1.84 5.62

(b) Recurring 36.94 28.02

(c) Total 38.78 33.64

(d) Total R&D expenditure as percentage 0.20% 0.22%of total income

Foreign exchange earnings and outgo:

Activities relating to exports, initiatives } Mentioned in the taken to increase exports: development of new } Directors' Report export markets for products services; and }export plans }

(Rs. in crore) Year ended Year ended 31.3.2008 31.3.2007

(a) Foreign exchange earnings 16776.48 13785.08(b) CIF Value of Imports 272.81 367.95(c) Expenditure in foreign currency 6421.96 6162.95

On behalf of the Board of Directors,

Place: Mumbai R.N. TataDated: April 21, 2008 Chairman

Management Discussion and Analysis:

INDUSTRY STRUCTURE, DEVELOPMENTS AND OUTLOOK:

Industry Overview:

Estimated global technology spend for 2007 (7.3% growth over previous year) was USD 1.7 trillion. Of this, USD 1.2 trillion (71% of spend) was Information Technology - Business Process Outsourcing (IT-BPO). In addition to the technology spend, Research and Development (R&D) and Engineering spend was estimated for 2007 at USD 800 billion.

Some of the key Industry trends impacting growth in Information Technology spending are:

1. Trimming of operational costs to remain price competitive,

2. Increasing regulatory compliance requirements,

3. Innovation-led growth using technology to improve time-to-market,

4. Achieving business transformation in an increasingly globalized world, and

5. Increasing shortage of IT skilled personnel in the developed economies.

This has resulted in increasing levels of outsourcing and off-shoring to price-competitive value-for-money IT service providers from India and other emerging IT powers.

Chart 2: Growth in world-wide IT spends:

Amounts in US$ Billion Yr 2006 Yr 2007 Growth (%)

IT Services 467 496 6.3BPO 421 462 9.7Packaged Software 230 249 8.3Hardware 452 478 5.8Total 1570 1685 7.3

Source: IDC, NASSCOM in 'Strategic Review 2008'

Chart 3: Growth in world-wide IT services spends:

Amounts in US$ Billion Yr 2006 Yr 2007 Growth (%)

IT Outsourcing 170 183 7.6Project Based Services 160 170 6.3Support & Training 137 143 4.4Total IT Services 467 496 6.3

Source: IDC, NASSCOM in 'Strategic Review 2008'

The healthy growth in world-wide IT spends in 2007 over 2006 is shown in Chart 2 and the growth in the components of IT services world-wide spends in 2007 over 2006 is shown in Chart 3.

The major markets and growth in these markets for IT services spend and BPO spend in 2007 is shown in Chart 4 and Chart 5 respectively.

Chart 4: Share of key markets in global IT Services spend in 2007:

IT Services 2007 Growth Market (% of Total (%) Market)

North America 48.0 7.0USA 45.0Western Europe 31.0 6.0Asia Pacific 15.0 7.9Japan 8.0Developing Economies 12.0Latin America 3.0 11.8Central Europe,Middle East and Africa 3.0 12.0Total IT Spend 100.0

Source: IDC, NASSCOM in 'Strategic Review 2008'

Chart 5: Share of key markets in world-wide BPO spend in 2007:

BPO 2007 Growth Market (% of (%) Market)

North America 70.3 9.5Europe, Middle East & Africa 18.7 7.0Asia Pacific 11.0 17.0Total IT Spend 100.0

Source: IDC, NASSCOM in 'Strategic Review 2008'

Size and scope of Global Opportunity:

As per the NASSCOM Strategic Review 2008, over the next four years, global technology spend is expected to cross USD 2 trillion, growing at a Compounded Annual Growth Rate (CAGR) of 5.6% and outpacing GDP growth in most developed countries. The forecasts for the components of this global technology spend for 2007 and 2011 period along with the CAGR over this period is shown in Chart 6. Healthy growth in the overall spending for technology in the markets of interest is expected to continue (Chart 6).

Chart 6: Global Technology spending 2007 and 2011 Forecasts:

Amounts in US$ Billion 2007 2011 CAGR (%)

IT Services 496 620 5.7BPO 462 677 10.0IT-ITES Services 958 1297 7.9R&D and Engineering 802 884 2.05

Source: IDC, NASSCOM in 'Strategic Review 2008'

Chart 7: Trend of Outsourcing in Global Technology spend:

Amounts in US$ Billion 2007 2011 CAGR (%)

IT Outsourcing 183 242 7.2BPO Outsourcing 462 677 10.0IT-ITES Outsourcing 645 919 9.3

Source: IDC, NASSCOM in 'Strategic Review 2008'

The increasing spend on outsourcing and strategic sourcing by global players (Chart 7), augers good growth prospects for the Indian IT-ITES industry.

The NASSCOM Strategic Review 2008 estimates that the Indian IT industry has large growth potential in view of the untapped Global Sourcing of Services Market (Chart 8).

Chart 8: The Market Opportunity:

Amounts in US$ Billion IT and Engineering Services BPO Services Current Addressable Current Addressable

India >29 ~200-250 ~11 ~160-190Others 15-18 15-18

Source: IDC, NASSCOM in 'Strategic Review 2008'

The NASSCOM report estimates that in fiscal 2008 only US$ 70-76 billion of the estimated technology related sourcing from offshore location was the actual penetration level of the addressable market size of US$ 360-440 billion (Chart 8).

The report further estimates that in view of this huge global opportunity, the Indian IT and BPO industries could grow at an annual rate greater than 25% and generate exports of about US$ 60 billion and domestic market of US$ 13-15 billion by 2010.

Source: IDC, NASSCOM in 'Strategic Review 2008'

Other reputed analysts have also estimated the size of the IT services markets and their estimates of size and growth rates of the markets are of the same order as the estimates in the NASSCOM Strategic Review 2008. The Datamonitor forecast of July 2007, estimates a CAGR of 7.1% for IT Services Markets for the period 2007-2011. As per this report, the Americas and Europe are expected to have the largest market size but their forecasted CAGRs will be low. The Asian market is expected to grow very fast and approach the market size of the European markets by 2011. The emerging Latin American and Middle-East/African markets, though smaller in size, is expected to have a higher CAGR. The Industry Practice view of 'Global IT Services -Outsourcing Market forecasts' indicates that Financial Services, Manufacturing, Public Sector, Telecommunications and Retail will continue to be the largest spenders. The CAGR is expected to be in the range of 6%-8% for all the Industries for the period 2007-2011.

Recent estimates of market growth by Forrester in December 2007 had moderated the expectations for 2008. For the first half of 2008, slower economic and IT spending growth are anticipated. As per Forrester, the major markets for IT Services' and Outsourcing Spends' in 2008 will continue to be North America, Western and Central Europe. The fastest growing markets for these services will be Eastern Europe, Middle East and Africa and the Asia Pacific Region. The growth in the Asia Pacific Region is expected to be driven by the anticipated growth in spends in China (20%) and India (18%).

As per a more recent IDC report titled 'World-wide Services 2008-2012 forecast - Finding Opportunities in a Challenging Time' released in April 2008, due to a weak economy in the United States, spending expectations for the five-year CAGR for the forecast period 2008-2012 has been reduced to 6.7% from earlier estimates of 7.3% for the five year period 2007-2011 forecasted in October 2007. The break-up of the new forecast is given in (Chart 9).

Chart 9: World-wide services spending:

Amounts in US$ Billion 2007 2012 2007-2012 CAGR (%)

IT Services 517 678 5.6Business Services 182 287 9.5Total 699 965 6.7

Source: IDC March 2008

As per this IDC report, companies and Government agencies are expected to spend more than US$ 746 billion on external services in 2008, representing a growth rate of 6.8% over 2007.

The report also states that the spending will reach over US$ 965.6 billion in 2012. According to the report, not all service areas will be affected in the same way. Outsourcing services represents the largest as well as the fastest growth opportunity, with a total five-year estimated CAGR of 8.4%. This growth forecast is attributable to: * The growth of outsourcing of non-core processes and the adoption of Service Oriented Architecture (SOA), which is prompting enterprises to shift towards tighter alignment of business and technology.

* The increasing demand for modernisation services for application maintenance contracts to help reduce operational costs.

* The increasing demand for higher value-added services and innovation as part of the outsourcing contracts.

* The increasing willingness of clients to use new and often disruptive delivery options (for example, hosting, Software as a Service (SaaS) and utility computing).

* The increasing demand from clients for adoption of off-shore services, driven by the need for (1) Cost Savings and (2) Time to Market for new areas of revenues.

Chart 10: World-wide services spending CAGR - IT Services Markets and offshore element:

The IDC-BCG analysis shown in Chart 10 forecasts that during 2006-2010 IT services spend will grow at a CAGR of 5.8%. The forecast has also given the CAGR by component of the services being outsourced and the offshore element of this growth.

Source: IDC-BCG Analysis in 'Strategic Review 2007'

India continues to be the off-shoring destination of choice for the Global Organisations and the Indian IT Services players are growing at 3 to 4 times the rate of their global IT Services counterparts.

Growth of Indian Information Technology Industry

Chart 11: Share of Exports and Domestic business - India Centric View:

Amounts in US$ Billion Domestic Export Total

FY 2004 8.3 13.3 21.6FY 2005 10.2 18.3 28.5FY 2006 13.2 24.2 37.4FY 2007 16.3 31.8 48.1FY 2008 (E) 23.2 40.8 64.0CAGR 29.3% 32.3% 31.2%

Source: IDC, NASSCOM in 'Strategic Review 2008'

With estimated revenues of US$ 64 billion in fiscal 2008 (Growth of 33%), the IT-BPO industry continues to grow much faster than the global IT services industry, clocking a CAGR of 31.2% since FY 2004. As indicated in Chart 11 the Indian Domestic Market is growing as robustly as the export of IT services from India.

Source: IDC, NASSCOM in 'Strategic Review 2008'

Market focus of the Company:

The discussions above validate the Company's strategy. The Company continues to grow in multiple geographies, particularly in mature markets like North America, the UK and other English speaking countries. The Company has increased its focus on the Western European and Asia Pacific regions. The Company has also been investing in emerging markets such as the Middle East, Africa, South America and Eastern Europe, identified as future high growth markets. THE COMPANY'S OPERATIONS AND MAJOR OFFERINGS:

The Service Offerings:

Currently, the major service offerings the Company has identified and is focusing on, in order to achieve its growth aspirations are:

(1) IT Solutions and Services: This offering includes Application Development and Maintenance, Technology Solutions, Migration and Re-engineering, Performance Management, Package Implementation, Systems Integration, Enterprise Solutions, Business Intelligence and Assurance (Testing) Services.

The Company provides services in the areas of supply chain management, devising CRM strategies and deploying content management solutions to integrate enterprise wide functions with comprehensive solutions.

The Company's SOLAR framework is a Service Oriented architecture framework of Integration and Information Management Services. The framework helps the Company to enable the convergence of Enterprise Integration, Business Intelligence and Content Management Initiatives for its clients, thus driving the cost of Information Technology lower. This framework also provides the agility to address the changing business and regulatory requirements of the customers.

The faster growing segments in the software services space are: (a) Assurance (Testing) Services (b) Business Intelligence (c) Enterprise Solutions and (d) Technology Solutions. The Company's strategy is to increase its focus on the faster growing segments in the mature market space.

(2) Asset based offerings:

The Asset based offerings of the Company are critical for the Company's non-linear growth. During the year the Company set up TCS Financial Solutions (TCS FS) Strategic Business Unit and consolidated all the assets acquired by the Company. TCS FS covers Banking, Capital markets and Insurance domain.

The Company's technology products assist customers to achieve significantly higher operational efficiency and realize time, cost and energy benefits at maximum Return on Investment (RoI). Our technology frameworks and products include:

TCS Data Cleansing FrameworkTCS Business Rules EngineTCS Experience Based Knowledge ManagementTCS Call Management SolutionTCS Public Key Infrastructure SuiteTCS Certificate Validation ServerTCS File Authentication SolutionTCS eLearning Effectiveness Measurement SolutionTCS Code Generator FrameworkTCS Saakshi (Time Stamping Solution)TCS Form Authentication SolutionTCS eVOLv Mutlimedia Authoring Solution

The Company has also developed comprehensive products in the healthcare segment. The Company aims to address the market needs in the healthcare segment.

(3) IT Infrastructure Services:

IT Infrastructure Services (IT IS) offering has enabled the Company to establish itself as an end-to-end IT service provider. It is a strategic horizontal business unit of the Company and was formed with the view to provide a focal point for supporting and providing Infrastructure Services to customers.

TCS has made significant investments in the ITIS space by setting up delivery centres across the world to cater to its growing global clientele. The ITIS horizontal business unit leverages the Company's delivery centres in India, Hungary, UK, Brazil, Uruguay and China to deliver Infrastructure Services. Additionally, the ITIS unit has established technology Centres of Excellence (CoEs) across various platforms and technologies. These CoEs bring enhanced value in terms of Technical Support, Knowledge Management, Training and Continuous Innovation for our clients.

The Company works using a three-phased roadmap to help clients better align their infrastructure with underlying business objectives:

1. Reduce operational cost by maximising offshore leverage and driving resource optimisation;

2. Enhance operational efficiencies through consolidation and rationalisation of the infrastructure and applications portfolio;

3. Drive business effectiveness by aligning Service Level Agreements (SLA) with business goals and ongoing business service management.

The Company is an end-to-end IT Infrastructure Services provider and helps customers enhance RoI through remote manageability and Service Level Agreements (SLA) based services, delivered in the Information Technology

Infrastructure Library (ITIL) framework.

(4) Business Process Outsourcing TCS BPO is strategically positioned to provide transaction processing and knowledge services to its customers. The Company is uniquely positioned to offer these services due to its strong focus on (1) industry domains (2) IT and Infrastructure synergy and (3) a strong reputation in industry leading products and solutions.

The Company offers value added transaction processing services to its customers in industry verticals like Banking, Insurance, Telecom, Pharma, Travel and Transportation and Retail. In addition, the Company has also set up CoEs in the areas of shared services like Finance and Accounting (F&A), Human Resources Outsourcing (HRO) [in partnership with SAP to provide multi country, multi jurisdiction payroll processing] and Supply Chain Management solutions by leveraging leading ERP vendor platforms. In the Knowledge Processing area the Company is expanding its presence in Asset Management, Market Research, Customer Analytics and Pharmaco Vigilance.

The Company's strength in process automation and IT transformation has guaranteed step changes in customer's productivity. This creates additional revenue generation avenues for the Company as well as increases the end client satisfaction, due to faster turnaround on client requests.

Customers of the Company stand to benefit from its platform BPO solutions which will substantially reduce the customer's total cost of ownership of infrastructure assets and provide a predictable, utility based transactional model.

(5) Engineering and Industrial Services (EIS):

The end-to-end services offered by EIS are: * Product Engineering, which includes:

(a) Engineering design (b) Product Lifecycle Management (PLM) solutions (c) Knowledge based engineering (d) Engineering analysis and (e) Electronics and embedded hardware and software.

* Plant Design Engineering, which includes front-end design and detail design of Process Plants. * Plant Automation Services, which include:

(a) Control System Integration (b) Production Optimisation (c) Manufacturing Execution Systems and (d) Adaptive Manufacturing at the shop floor level for manufacturing optimisation * Sourcing and Manufacturing Services, which include: (a) Component Sourcing and (b) Electromechanical Manufacturing Services. * Enterprise Asset Management Services, which include: (a) Reliability Centric Maintenance (RCM) Strategy Development (b) Technology Selection and (c) Technology Deployment.

* Geo Spatial Technologies, which include: (a) GST consulting, technology selection, deployment and enterprise applications integration (b) Remote Sensing/Image processing and (c) Data Management.

The services in this SBU are focused on serving the following verticals: (1) Hi-Tech and Telecom (2) Aerospace (3) Oil & Gas (4) Utilities (5) Industrial and (6) Automotive (6) Global Consulting Services

Global Consulting positions the Company as a business advisor in order to develop closer, broad based relationships with clients. It delivers high value services and innovative business models to the Company's clients and prospects globally.

Global Consulting capitalises on the Company's collective technology capabilities and industry insights to efficiently and successfully provide consulting services to its customers. The Company's focus is to enhance business value for its clients through a strong integration and alignment of business and IT.

Global Consulting Practice consists of two service areas to help the Company's clients envision, plan and achieve transformation. These are: 1) Business consulting services which help clients envision innovative solutions and provides advice on how to achieve adoption of these solutions within the complex client organisations.

2) IT consulting services which ensure that the client's IT strategy is closely aligned with their business transformation imperative.

Each service area requires an array of competencies to address specific requirements from people, process and technology perspective. Global Consulting combines industry knowledge with these competencies to create a custom solution for each client's needs.

Using the Company's industry insight and technology expertise, Global Consulting drives integrated end-to-end IT enabled business transformation services that helps clients to manage current business requirements, while preparing for future challenges.

The Industry Solutions Units:

The Industry Verticals where the Company has a sizable presence around which the Company has reorganised its Industry Solutions Unit include:

(1) Banking and Financial Services(2) Insurance(3) Manufacturing(4) Telecom(5) Retail and Distribution(6) Travel and Hospitality(7) Energy, Resources and Utilities(8) Life Sciences and Health Care(9) Media and Information Services(10) Government

The TCS Sales Organisation:

In addition to India, the geographies in which the Company operates and has sales offices are North America, the UK and Ireland, Europe, Iberoamerica, the Middle East and Africa and the Asia-Pacific region (APAC). Each of these geographies has access to the Company's expertise in industry and service domains for effectively addressing market opportunities. As of February 2008 the Company had 155 offices worldwide in 41 countries and operated out of 111 locations worldwide.

In addition as on March 31, 2008, the Company had 52 subsidiaries. The Company has 43 offices in 39 locations in USA and Canada, 13 offices in 13 locations in 9 countries in Iberoamerica, 9 offices in 8 locations in the UK and Ireland, 21 offices in 21 locations in 11 countries in Europe, 14 offices in 14 locations in 11 countries in the Asia Pacific Region and 6 offices in 6 locations in 5 countries in the Middle East and Africa. The sales organisation has been aligned to meet the needs of the customers.

Alliances and Partnerships:

The Company recognises that a total solution to customers requires a combination of hardware, software products and services. The Company has identified eleven (11) strategic partners who are large global corporations, providing the underlying hardware and software platforms and seventy (70) solution partners whose solutions are provided as part of our systems integration offerings to clients.

THE COMPANY'S STRATEGY:

The Company's Corporate Strategy can be viewed from two different perspectives. These are (A) Operational Strategy (B) Geographic Growth Strategies.

A. The Operational Strategy is built on three pillars.

These are:

1. Global Network Delivery ModelT2. Strategic Acquisitions and3. Integrated Full Services Play.

1. Global Network Delivery ModelTM or GNDMTM:

The Global Network Delivery ModelTM is much more than having an India-centric delivery model with near-shore centres. The Model enables the Company's delivery centres to collaborate on projects, leverage all its assets and work on a follow-the-sun basis if necessary, in order to ensure 'One Global Service Standard' - through homogeneity in terms of quality, skills as well as look-and-feel. This gives the Company's customers the same experience of certainty, irrespective of whether they work with us in Hyderabad, Hungary, or Hangzhou (China). GNDMT helps us to build unique value proposition. During fiscal 2008, the Company had expanded its operations in Mexico by launching a global delivery centre in the city of Guadalajara, with over 500 professionals.

The Company also established a delivery centre in Dusseldorf in Germany during the year. The Company has recently inaugurated a new regional delivery centre in Cincinnati (Ohio).

2. Strategic Acquisitions:

The strategic acquisitions done over the years which have created new capabilities within the Company have started yielding synergistic growth. The Company had made a number of small acquisitions in order to plug the gap in its solutions capability and competency. The Company also made acquisitions to improve its presence in select geographies.

Acquisition of Financial Network Services (FNS) in Australia and TKS Teknosoft in Switzerland in the recent past has helped the Company to have a complete product portfolio in the Financial Services Sector. In 2008 TCS Financial Solutions (TCS FS) was placed in the leadership quadrant of the Gartner Survey for Retail Banking Solution Providers.

3. Integrated Full-Services Play:

The Company is increasing its focus on expanding the breadth of its service offerings and capabilities to become a full services provider. The Company's end-to-end IT Services offering are:

(i) Application Development and Maintenance(ii) Technology Solutions(iii) Package Implementation(iv) Systems Integration(v) Enterprise Solutions(vi) Business Intelligence(vii) Assurance Services(viii) IT Infrastructure Services(ix) Business Process Outsourcing(x) Global Consulting Services(xi) Asset Based Services and(xii) Engineering and Industrial Services.

The operational strategy now captures the entire value chain of IT - from consulting to products and solutions and from implementation to support. A recent example of the success of this strategy is the engagement with The Nielsen Company. TCS secured this breakthrough US$ 1.2 billion, 10-year BPO and IT services deal with Nielsen in which consulting enabled business transformation, systems integration, outsourcing - are all required to play important roles at different stages of the contract.

B. The Geographical Growth Strategy is based on focused efforts to grow businesses in the major markets and the new emerging markets.

Major Markets Strategy:

The Company continues to focus on servicing its clients and growing its business in the major markets, namely North America, Western Europe, the UK and Ireland. The focus on these major markets would be to service the Key Clients by extending the core business with newer offerings and acquiring new clients. This focus on Key Accounts helps the Company to push for aggressive growth in the Company's established markets using a client centric strategy.

The Company has numerous multi-year relationships established with Global Multinationals in these markets and has been offering a multiple range of services.

New Growth Markets Strategy:

The Company has increased its focus on the growth markets of the Asia Pacific region and the emerging new growth markets of Latin America, Eastern Europe, Middle-East and Africa. These markets though smaller in size are growing at a much faster rate. The solutions focus for these developing markets will aim to extend the core business in these emerging markets.

This strategic thrust in new markets is beginning to produce the desired results as evidenced by our recent win in Mexico of a US$ 200 million contract of four years duration, TCS was chosen as a strategic IT partner to IMSS, the Government of Mexico's Social Security Organisation. With over 370,000 employees and providing coverage to over 50 million Mexican citizens, IMSS is the largest organisation of its kind in Latin America. The Company, in its role as the strategic IT services partner for IMSS, will provide end-to-end IT services. This includes services such as application maintenance and support, custom software development, business analysis services, management of strategic IT programmes and value added initiatives for the IMSS and its affiliates.

NEW OPERATING MODEL:

In order to move the Company to the next level of performance in the service of its clients, a new operating model with the Industry Solutions Unit (ISU) as the driver for future growth has been put in place. The Company has reorganised its global operations into integrated customer-centric units to enhance customer focus, drive operational agility and address new growth opportunities in the market. The new 'global operating model' will provide customers with a single view of the Company, encompassing project delivery and relationship management and enable a sharper focus on the customer. This new operating model has been effective from April 01, 2008. The purpose of this new customer centric operating model is to empower the frontline decision-makers to stay focused on serving the customers with agility and achieve customer delight. The new structure will support greater focus for strategic growth behaviour that will drive non-linear revenue growth. In addition to TCS Financial Solutions and the Small and Medium Business Solutions, the Company has constituted a new unit for Platform BPO Solutions. These strategic growth businesses will operate as independent units that will leverage the Company's sales, delivery and customer relationships as required.

In the new operating model, all necessary delivery, domain and technology expertise and resources will be embedded in these units to promote greater collaboration with the customer. All operating units will be supported by a common group of organisational infrastructure units, such as the Technology Excellence, Process Excellence, Resource Management and Shared Services groups.

STRATEGIC GROWTH BUSINESSES:

The Company has undertaken a number of strategic business initiatives to build emerging businesses in its chosen markets. These are:

(1) TCS Financial Solutions(2) Platform based BPO(3) Small and Medium Business.

These business units are expected to be major contributors to the non-linear growth plans of the Company going forward.

TCS FINANCIAL SOLUTIONS:

Over a period of time, the Company has created and acquired a number of software assets, components and frameworks in the BFSI domain. These assets cover a wide range of functions and activities in the financial value chain. Over the years the Company has been implementing systems in global financial institutions using these software assets. Since we have created extensive capabilities within the organisation around these products, the Company created TCS Financial Solutions as a Strategic Business Unit to focus on product related solution.

This SBU has been entrusted with the task of creating a global brand, world class engineering and support function, consultative positioning, marketing and selling of the software in the Banking, Capital Markets and Insurance domain. During fiscal 2008, the SBU has achieved the following:

* Adopted a 'one integrated product set' paradigm to accelerate further the object and service orientation.

* Brought all the software products under a common, globally applicable brand TCS BaNCS. * Increased the mindshare with thought leaders and industry analysts around our solution capabilities which has resulted our products being positioned well.

During fiscal 2008, the business unit has been able to win 47 new deals globally. Currently there are over 40 ongoing implementations and in the last 18 months, the SBU has successfully delivered implementation certainty to over 50 client installations.

PLATFORM BASED BPO:

Platform based BPO is a delivery model in which the Company utilises a technology platform, to provide business solutions based on highly standardised processes. The Company owns the process, the underlying platform and applications, as well as people and infrastructure to deliver the outsourced business process services.

The conceptual and strategic thinking behind the adoption of such a service offering from the Company is the emergence of process factories which are servicing the global organisations that are actively outsourcing their business processes. The Company believes that its ability to create and deliver value to its clients will be superior where it controls the value chain for these process factories. In the Platform-BPO approach, service delivery and the revenue driver moves from being people-centric, to being platform and domain centric.

The strategies that the Company has adopted for building these process factories of the future are using a shared platform, adopting a transformational approach, implementing standardised processes in the client organisation, weaving servicing around the platform and building world class infrastructure.

SMALL AND MEDIUM BUSINESS:

The Company has launched the Small and Medium Business (SMB) SBU with the objective of offering 'IT-as-a-Service' framework to redefine IT Consumption Model among Small and Medium Business (SMB). This unit will be focused on meeting the technology needs of SMBs. The Company will offer 'IT-as-a-Service' in an innovative business model giving SMBs the experience of customised low-cost solutions scalable to their growing business needs.

'IT-as-a-Service' is a subscription-driven model that allows SMBs to scale as they grow and pay as they use. It is hosted centrally on a common platform in order to facilitate alignment of technology adoption to the needs of the business and bring scalability to the business model. The 'IT-as-a-Service' model will allow SMBs to take advantage of the Company's existing intellectual property, infrastructure and scale, as well as that of its partners. It will provide SMBs with blueprints for business process improvement and deliver integrated end-to-end managed solutions. It also offers flexible pricing options to reduce capital expenditure, manage cash flows and maximise return on investment. This will help provide SMBs with opportunities for greater cost control and faster go-to-market.

Management monitoring and implementation of Company strategies:

The Company's senior management team is focused on monitoring and improving performance of the Company. Balanced Score Cards are used as one of the tools to implement these strategies. The Company also uses appropriate dashboards for measuring and monitoring its performance and those of its various businesses and operating units.

Business Unit Participants Frequency Level Strategic review Sr. Leadership Team, Monthly Strategic Unit Heads, Think Tank

Geography Chief Operating Officer Monthly Tactical (COO), Geography Head, Geography Senior Management and Key Members

Industry Verticals COO, Unit Head, Unit Members Monthly

Service Lines COO, Unit Head, Unit Members Quarterly

Delivery centers COO, Unit Head, Unit Members Monthly

Functions: Human Functional Head, Unit MonthlyResource, Finance, Members Marketing

Functions: Chief Functional Head, Unit QuarterlyInformation Officer, Members Chief Technology Officer, R&D, Infrastructure Planning and Development

Subsidiaries: Subsidiary Head, Unit Quarterly(Financial Network Members Services, Comicrom Diligenta, CMC)

Relationships Executive Sponsor, Monthly Opera- Relationship Head, Unit tional Members

OPPORTUNITIES, THREATS, RISKS AND CONCERNS:

Opportunities:

TCS is the largest Indian IT Services Company in terms of revenues, profits, number of employees and market capitalisation. Established in 1968 as a division of Tata Sons, TCS has pioneered the concept of offshore IT services since 1974 and has emerged as an integrated full-services player with a global footprint and scale.

Opportunities for the Company for sustaining profitable growth emerge from: * Increasing acceptance of outsourcing as a relevant business strategy in a globalised world.

* Customer need for new and innovative solutions and services in order to reduce time-to-market.

* Robust growth in Global IT Spend generating continuing strong demand for our services.

* Being invited to bid for large value deals on par with Global IT services players.

* Consolidation of offshore and onsite vendors which are making larger IT players more attractive for clients.

* Increasing focus on cost considerations in difficult economic times - resulting in higher levels of offshoring.

The Company's strategy for leveraging these opportunities is addressed in the Strategy section of the Management Discussions and Analysis.

Threats, Risks, Concerns and Risk Mitigation:

The Company has put in place an Enterprise-wide Risk Management (ERM) process and reports on the risks it is faced with, to the Board of Directors. The Company believes that it has robust and 'fit for purpose' risk management processes in place.

Some of the major risks and concerns identified are as follows:

Global economic environment:

The Global economic environment is deteriorating and the possibility of economic slow-down in the USA (which accounts for around 50% of our business) is high in fiscal 2009. This may, in varying degrees, affect other economies. As a result, market related business and credit risks with clients in some of the countries are expected to rise.

To address this risk, the Company has increased diversification across geographies, enlarged the basket of offerings and has focused on enlarging global presence, by strengthening the global development centres.

Currency Fluctuations related risks:

Strengthening of the Indian Rupee has adversely affected the IT industry in fiscal 2008. It may continue in fiscal 2009.

The Company has used various types of foreign currency forward and options contracts to hedge the risks associated with fluctuations in these currencies. The Company has laid down appropriate policies and processes for the use of financial derivative instruments consistent with its risk management strategy. Also, the Company has developed software products to monitor, manage and report the exposures on a daily basis.

Commoditisation of offerings/value proposition:

Increased competition from Indian and Global IT players could result in pressure on pricing and commoditisation of low-end services.

Global IT Service and consulting companies are expanding operations in India through organic and inorganic routes. They are in a position to offer full services play with 'India-Cost' advantage.

Competition from other developing countries like China which have a reasonable pool of knowledge workers is increasing. The market for outsourced IT and ITES services are becoming more global in nature. A broader competitive field may create pressure on prices as new global service providers in China, Malaysia, Brazil, Mexico, Russia and Eastern Europe enter the global market.

This risk is countered by broadening the Company's service offerings and targeting increasingly complex deals. Investment in creating brand awareness could act as a differentiator. In fiscal 2008, the Company has invested substantial amounts in the 'Experience certainty' campaign in order to increase the awareness of the TCS Brand.

The Company is focused on innovation. Innovation initiatives are in multiple forms, but all of these are focused on better productivity through continuous improvement in processes, systems, methodologies and capabilities. Emphasis on innovation also helps the Company in moving up the value chain. Innovation in the Company is practiced by adopting 'derived' innovation that seeks continuous improvement in every area and by 'platform' innovation, whereby multiple capability and skill teams engage to develop innovative ideas. Innovation has resulted in new types of offerings to customers such as 'IT-as-a-service' for small and medium businesses launched in fiscal 2008.

Break-through innovation:

The Company has come up with a Co-Innovation Network ('COIN'), which is an ecosystem by which the Company creates innovation networks between itself and individuals and organisations outside of TCS, who have new products and Intellectual Properties (IP), or ideas and financiers such as Venture Capitalists. This enables product partners in 'COIN' to get a bigger market and consequently enables the Company to provide an increased range of offerings to its customers. The Company held its US Innovation Forum 2008 at Palo Alto, California. This exclusive event, hosted by TCS COINT , provided invitees the opportunity to connect to peers and discuss innovation in emerging technologies that impact businesses. Thought leaders from renowned universities, disruptive start-up companies, research organisations, venture funds and our select clients participated.

Gross margin deterioration risk:

Increased competitive pressure in India for the pool of available talent has been driving employee costs higher. Over the past few years such continuing rise in salary costs and other input costs have narrowed the cost differentials between India and the developed countries.

Heightened competition from global and Indian IT companies has been limiting the ability to increase billing rates.

Risk mitigation action includes increasing volume of value added services like Global Consulting which commands higher rates and focusing on higher margin activities like increasing offshore leverage. Due to the Company's ability to offer superior services it has been able to get rate increases at contract renewal time. Productivity improvements and better cost management on a continuous basis are being used to reduce this risk.

Immigration and visa regulations related risks:

Timely availability of requisite number of work visas for the US, the UK and Europe has always been a challenge for the Indian IT services companies. In the UK the eligibility for Visa is changing to a 'Points Based System'.

In order to counter this risk, improvements in advanced visa planning and timely enhancement of 'local recruitment' plans at global locations are being pursued with rigour.

Hiring and retention of employee related risks:

The requirement for having qualified professionals at junior, middle and specialist levels in significant numbers, for the projected growth in business in a talent-starved marketplace continues to be exacerbated. Managing attrition, as well as salary expectations is a significant challenge.

This challenge is met through enlarging the number of engineering educational institutions from which the Company recruits. Our academic interface programme also includes training of college faculty and providing appropriate course material, to ensure that these educational institutions are able to maintain the requisite quality. The Company has embarked on recruiting Science graduates with the aptitude for IT services business, for its needs. Consequently, the 'available pool of qualified resources' has been redefined, since India produces a very large number of Science graduates.

Counterparty risk in treasury operations:

As mandated by RBI, authorised institutions are the intermediaries or 'counterparty' for treasury operations. These institutions are mostly global MNC banks of repute. The global financial uncertainty as a result of the issues arising in credit markets increases the inherent risks of the hedging transactions that the Company undertakes with these institutions.

In order to counter this risk, the Company uses multiple intermediary institutions and reduces exposure to any single institution. The Company also conducts regular review of the Treasury processes and the counterparty limits.

Risk of Customers/Clients facing financial difficulty:

The Company's credit terms are standard and there is constant monitoring of the creditworthiness of the customers and prospective clients. This is especially critical in case of customers where the Company experiences delayed payments. For risk mitigation, the Company has enhanced the monitoring of outstanding amounts from its customers.

FINANCIAL PERFORMANCE:

OVERVIEW:

The financial performance of Tata Consultancy Services Limited (TCS Limited) as per Indian GAAP is discussed hereunder in two parts:

(i) Tata Consultancy Services Limited (Unconsolidated) which excludes the performance of subsidiaries of TCS Limited.

(ii) Tata Consultancy Services Limited (Consolidated) which includes performance of subsidiaries of TCS Limited. The Consolidated Financial Statements bring out comprehensively the performance of the TCS group of companies and are more relevant for understanding the overall performance of the TCS group.

The financial statements are prepared in compliance with the Companies Act, 1956 and generally accepted accounting principles in India.

The total income of TCS Limited (Unconsolidated) aggregated Rs.18,979.67 crore in fiscal 2008 as compared to Rs.15,156.52 crore in fiscal 2007, registering a growth of 25.22%. In fiscal 2008 the Company's (Unconsolidated) profit before taxes aggregated Rs.5,003.86 crore as compared to Rs.4,170.68 crore in the previous fiscal 2007 - a growth of 19.98%. In fiscal 2008, the total income of TCS Limited (Consolidated) aggregated Rs.23,349.45 crore as compared to Rs.18,914.26 crore in fiscal 2007, recording a growth of 23.45%. The consolidated profit before taxes aggregated Rs.5,845.95 crore in fiscal 2008 as compared to Rs.4,918.28 crore in fiscal 2007 - a growth of 18.86%. For fiscal 2008 TCS Limited declared three interim dividends of Rs.3 each on the equity shares. A final dividend of Rs.5 per equity share has been recommended. Full details of the dividend paid are available in the Director's Report.

RESULTS OF OPERATIONS - TCS LIMITED (UNCONSOLIDATED):

The Management's Discussion and Analysis given below relates to the financial statements of TCS Limited (Unconsolidated). The discussion should be read in conjunction with the financial statements and related notes for the year ended March 31, 2008.

The following table gives an overview of the financial results of TCS Limited (Unconsolidated):

Income from Operations A B C D E

Information technology and 17,690.38 93.21 14,407.95 95.06 22.78consultancy services

Sale of equipment and 843.34 4.44 532.02 3.51 58.52software licences

Sub-total 18,533.72 97.65 14,939.97 98.57 24.05

Other Income (Net) 445.95 2.35 216.55 1.43 105.93

Total Income 18,979.67 100.00 15,156.52 100.00 25.22

Expenditure:

Employee costs 6,015.19 49.60 6,446.37 48.29 28.60

Overseas business expenses 3397.86 873.09 (employee cost)

Overseas business expenses 417.19 2.20 356.17 2.35 17.13(other than employee cost)

Services rendered by 689.25 3.63 756.12 4.99 -8.84business associates and others

Operation and Other Expenses 2,994.12 15.78 2,207.25 14.56 35.65

Total Expenditure 13,513.61 71.20 10,639.00 70.19 27.02

Profit before Interest, 5,466.06 28.80 4,517.52 29.81 21.00Depreciation, and Taxes

Interest 3.42 0.02 3.43 0.02 -0.29

Depreciation 458.78 2.42 343.41 2.27 33.60

Profit before Taxes 5,003.86 26.36 4,170.68 27.52 19.98

Provision for Taxes:

Income tax expense 470.45 2.48 395.64 2.61 18.91(Including Deferred Tax Benefit and MAT Credit Entitlement)

Fringe Benefit Tax 24.65 0.13 17.75 0.12 38.87

Net Profit from 4,508.76 23.76 3,757.29 24.79 20.00Operations after taxes

A = For the year ended March 31, 2008 - Rs. Crore B = For the year ended March 31, 2008 - % of IncomeC = For the year ended March 31, 2007 - Rs. Crore D = For the year ended March 31, 2007 - % of IncomeE = FY 2008 Vs. FY 2007 - % Increase

Notes:

1. 'Overseas business expenses' mainly comprise:

(a) Subsistence allowances paid to employees assigned in overseas countries, their visa expenses and (b) travelling and marketing related expenses incurred abroad. For the purpose of the above summary statement of Profit and Loss Account, the component of overseas business expenses relating to employee costs in (a) above has been grouped with employee costs for ease of comparison of employee related costs in fiscal 2007 and 2008.

2. A significant feature of fiscal 2008 is the volatility in foreign currency exchange rates adversely affecting the export oriented industries. TCS Limited earns its revenues in US Dollar, GB Pound, Euro and multiple other foreign currencies. During the fiscal 2008, vis-a-vis Indian Rupee, US$ fell by 11.05%, GBP fell by 5.64% and Euro fell by 1.76% on the basis of average daily closing prices. Revenues in foreign currencies constituted 91.5% in fiscal 2008. Revenues in US$ were 60.7% of total revenues. Consequently, revenues in Indian Rupee got adversely affected. Expenditure in foreign currencies constituted 36.9% of the total expenditure in fiscal 2008 - providing a relatively narrow natural hedge to the exchange rate risk in the business. These factors resulted in relatively lower growth in revenues. However, the growth in expenditure, in absolute value and also in proportion to revenues went up. The Company, through its superior management of currency exchange risk, could mitigate the impact partially.

3. In the summary of results given above, numbers for the fiscal 2007 as well as fiscal 2008 have been regrouped for ease of comparison.

Income:

Income from Operations:

The Company's revenues consist mainly of income from Information Technology and Consultancy Services. The Company provides consultancy services either on time and material basis or fixed price fixed time basis.

The Company recognises revenues from contracts priced on a time and materials basis when services are rendered and related costs incurred.

Revenues from turnkey contracts, which are generally time bound fixed price contracts, are recognised over the life of the contract using the percentage completion method, with contract costs determining the degree of completion. Foreseeable losses on such contracts are recognised when such losses are probable.

The Company recognises revenues from the sale of computer equipment and software licenses upon delivery, which is when the title passes to the customer. Revenues from maintenance contracts are recognised pro-rata over the period of the contract.

The Company's (unconsolidated) revenues increased to Rs.18,533.72 crore in fiscal 2008, from Rs.14,939.97 crore in fiscal 2007 - a growth of 24.05%. Revenues from information technology and consultancy services increased to Rs.17,690.38 crore in fiscal 2008 from Rs.14,407.95 crore in fiscal 2007 - a growth of 22.78%.

Revenues from sale of equipment and software licenses increased to Rs.843.34 crore in fiscal 2008 from Rs.532.02 crore in fiscal 2007 -a growth of 58.52%. The growth is mainly due to increase in the domestic system integration contracts in fiscal 2008.

Other Income:

Other Income in fiscal 2008 increased to Rs.445.95 crore from Rs.216.55 crore in fiscal 2007. Other Income comprises interest received on deposits with banks, dividends received on investments in subsidiaries, dividends from mutual funds and gains due to exchange rate fluctuations. Primary reasons for the increase in Other Income are:

(a) Exchange gain (net) in fiscal 2008 of Rs.267.45 crore compared to a gain of Rs.55.91 crore in fiscal 2007

(b) Dividends of Rs.104.27 crore from investments in Mutual Funds in fiscal 2008 as compared to Rs.35.44 crore in fiscal 2007.

In fiscal 2008, there is no item similar to profit on sale of investment in SITEL India of Rs.66.28 crore in fiscal 2007.

TCS Limited enters into various forward and option contracts to manage its exposure to exchange rates, in accordance with its risk management policies and procedures. These contracts are generally entered into with banks as counterparties and are for a maximum period of eight years. The Company designates its hedging instruments as cash flow hedges upon completion of the formal documentation and testing for effectiveness which is done periodically, applying the recognition and measurement principles set out in the 'Financial Instruments: Recognition and Measurement' (AS 30). All such hedging instruments are measured at fair value, at the reporting dates. Changes in the fair value between the reporting dates of such instruments designated as effective hedge of future cash flows are recognised in the 'shareholders' funds' and the ineffective portion is recognised as 'other income' (net) or 'other expenses' (net) as the case may be, in the Profit & Loss Account.

Other Items of Operation and Other Expenses:

Nature of Expenses For the year For the year ended ended March 31, 2008 March 31, 2007 Rs. % Rs. % Crore Income Crore Income Software, hardware and material costs 838.46 4.42 645.85 4.26Cost of software licences 390.23 2.06 229.35 1.51Communication 245.09 1.29 196.35 1.30Travelling and conveyance expenses 278.00 1.46 210.17 1.39Rent 322.58 1.70 228.83 1.51Legal and professional 93.12 0.49 90.33 0.60Repairs and Maintenance 112.29 0.59 92.19 0.61Electricity 135.57 0.71 93.89 0.62Recruitment and training expense 140.46 0.74 107.44 0.71All Other Expenses 438.32 2.31 312.85 2.06Total Other Expenses 2,994.12 15.78 2,207.25 14.56

Operating and Other Expenses (other than employee allowance and cost of services rendered by business associates, already discussed above), have gone up from Rs.2,207.25 crore in fiscal 2007 to Rs.2,994.12 crore in fiscal 2008. In terms of total income, it has gone up from 14.56% in fiscal 2007 to 15.78% in fiscal 2008. The increase in primarily due to:

(1) Higher software, hardware and material costs incurred for the bought out components in execution of systems integration contracts in fiscal 2008 as compared to fiscal 2007 on account of higher volume of systems integration business.

(2) Higher expenditure on software licenses on account of increased volume of software business.

(3) Higher rental and electricity expenses for additional leased premises taken. Also, 'All Other Expenses' are higher in fiscal 2008 as compared to fiscal 2007 due to increase in:

(a) Higher printing and stationary expenses.

(b) Rates and taxes due to additional leased facilities taken.

Profit before Interest, Depreciation and Taxes (PBIDT):

The profit before interest, depreciation and taxes in fiscal 2008 was Rs.5,466.06 crore, an increase of 21.00% from Rs.4,517.52 crore in fiscal 2007. The profit as a percentage of income went down from 29.81 % in fiscal 2007 to 28.80% in fiscal 2008. The decline in the PBIDT during fiscal 2008 is attributable to appreciation of Indian Rupee vis-a-vis US Dollar and some other major currencies, increase in employee costs and other operating costs mainly arising out of expanded capacities created. This reduction in PBIDT as a percentage of total income is attributable to an increase in employee cost 1.31% and operation and other expenses 1.22% offset by a reduction in services rendered by business associates and others of 1.36% and lower 'Overseas Business Expense (other than employee related expenses) of 0.15% in fiscal 2008 as compared to fiscal 2007.

Interest Costs:

Interest expenses decreased from Rs.3.43 crore in fiscal 2007 to Rs.3.42 crore in fiscal 2008.

Depreciation:

Depreciation charge increased from Rs.343.41 crore in fiscal 2007 to Rs.458.78 crore in fiscal 2008-an increase of 33.60%. In terms of total income the depreciation charge was 2.42% of total income in fiscal 2008 (2.27% in fiscal 2007). The increase is attributable to substantial additions to the infrastructural facilities and hardware bought for internal use during the fiscal.

Profit before Taxes:

The Profit before Taxes in fiscal 2008 was Rs.5003.86 crore, an increase of 19.98% from Rs. 4,170.68 crore in fiscal 2007. In terms of total income, the Profit before Taxes (PBT) went down from 27.52% in fiscal 2007 to 26.36% in fiscal 2008. The primary reasons for the decrease in the PBT as a percentage of total income are: (a) drop in Profit before Interest, Depreciation and Taxes in terms of total income, 29.81% in fiscal 2007 to 28.80% in fiscal 2008.

(b) Higher depreciation in fiscal 2008 as compared to fiscal 2007 - a reduction of 0.15% in PBT as a percentage of total income in fiscal 2008.

Provision for Taxation:

Income tax expense comprises the current income tax and the net change in the deferred tax assets and liabilities in the applicable fiscal period.

Income tax expense comprises tax on income from operations in India and foreign tax jurisdictions. The Company benefits in India from certain tax incentives under section 10A of the Income Tax Act, 1961, for the IT services exported from designated 'Software Technology Parks (STP)'. In addition, benefit from tax incentives applicable to Free Trade Zones are available to the Company in respect of some of the units located in such zones. The benefits applicable to the Software Technology Parks (STPs) were to expire by the end of March 2009, or upon completion of ten years of the respective STP units, whichever was earlier. Recently, the sun-set clause has been extended by one year to March 31, 2010.

Minimum Alternative Tax (MAT) paid in accordance with the tax laws, gives rise to tax credit. Post tax-holiday period, the Company would have sufficient tax liability to offset these tax credit and as such MAT is recognised as an asset in the Balance Sheet.

Fringe Benefit Tax is payable by the Company on the value of the benefits provided and/or deemed to be provided to its employees.

The tax expense (including Fringe Benefit Tax and MAT Credit Entitlement) increased from Rs.413.39 crore in fiscal 2007 to Rs.495.10 crore in fiscal 2008. This represented 2.61% of the total income in fiscal 2008 (2.73% of the total income in fiscal 2007). The reduction in tax expense as a percentage of total income is primarily attributable to write-back of Rs.37.52 crore arising out of a review of the tax positions.

Net Profit:

The Company's net profit registered a growth of 20.00% from Rs.3,757.29 crore in fiscal 2007 to Rs.4,508.76 crore in fiscal 2008. Net profit margin on the total income declined from 24.79% in fiscal 2007 to 23.76% in fiscal 2008. The reduction in net profit margin of 1.03% is attributable to a decline in PBT of 1.15% offset by lower net taxes of 0.12% in fiscal 2008 as compared to fiscal 2007.

FINANCIAL POSITION - TCS LIMITED (UNCONSOLIDATED):

Share Capital:

Amount in Rs. Crore

As at As at March 31, March 31, 2008 2007

Authorised Share Capital 220.00 120.00Issued, Subscribed and Paid up Share Capital 197.86 97.86

On March 28, 2008, 100 crore of Redeemable Preference Shares of face value of Re.1/- each were allotted to Tata Sons Ltd. These shares would be redeemable at par at the end of six years from the date of allotment but may be redeemed at any time after 3 years from the date of allotment at the option of shareholder. These shares would carry a fixed cumulative dividend of 1% per annum and a variable non-cumulative dividend of 1% of the difference between the rate of dividend declared during the year on the equity shares of the Company and the average rate of dividend declared on the equity shares of the Company for three years preceding the year of issue of the Redeemable Preference Shares.

Authorised share capital as on March 31, 2008 was Rs.220 crore (Rs.120 crore March 31, 2007). Authorised Share Capital was increased by Rs. 100 crore enabling the Company to issue 100 crore 'Redeemable Preference Shares' of Re.1/- each pursuant to a shareholders' resolution passed by postal ballot on March 17, 2008.

The issued, subscribed and paid-up share capital as on March 31, 2008 comprised Rs.97.86 crore of equity shares of face value Re. 1/- each and Rs.100.00 crore of Redeemable Preference Shares of face value Re.1/- each.

Reserves and Surplus:

Securities Premium Account as on March 31, 2007 stood at Rs.2,017.75 crore. As on March 31, 2008 the balance in this account stood at Rs.2,016.33 crore, net of preference share issue expenses of Rs.1.42 crore.

Arising out of the revision in the Accounting Standard 15 effective April 1, 2006, relating to employee benefits, the Company had reviewed and revised its accounting policy in respect of employee benefits and identified Rs.132.09 crore (net of deferred tax) as transitional provision which was adjusted against the opening balance in the General Reserves as on April 1, 2006. Consequent to the Guidance on Accounting Standard 15 which clarifies the applicability of the said Accounting Standard, the Company has identified certain entitlements to earned leave which can be carried forward to the future periods as long term employee benefits. As a result, the reduction in the liability of Rs.28.67 crore on April 1, 2006 has been added to General Reserves in fiscal 2008.

Out of the profits in fiscal 2008, an amount of Rs.450.88 crore (Rs.375.73 crore in fiscal 2007) representing 10% of the net profits has been transferred to General Reserves resulting in a closing balance of Rs.1,394.67 crore as on March 31, 2008 (Rs.915.12 crore as on March 31, 2007).

Balance in the Profit and Loss Account as on March 31, 2008 stood at Rs.7,374.89 crore (Rs.4,919.99 crore as on March 31, 2007).

Foreign Currency Translation Reserve was Rs.36.21 crore as on March 31, 2008 (Rs.34.56 crore as on March 31, 2007). Foreign Currency Translation Reserve of Rs.36.21 crore is primarily on account of Mark to Market valuation of loan extended to overseas subsidiaries.

Profit/Loss on Cash Flow Hedges stood at a loss of Rs.15.15 crore as on March 31, 2008 (Rs.73.71 crore profit as on March 31, 2007). The loss represents effect of mark to market valuation of cash flow hedges taken for projected revenues.

Reserves and Surplus at the end of fiscal 2008 stood at Rs.10,806.95 crore - an increase of 35.75% over Rs. 7,961.13 crore at the end of fiscal 2007.

Loans:

Secured Loans at the end of fiscal 2008 aggregated Rs. 9.27 crore (Rs.41.76 crore at the end of fiscal 2007). This is due to decrease in overdrafts from banks taken to meet temporary mismatch in funds flow. The overdraft facilities are secured against domestic book debts.

Unsecured loans at the end of fiscal 2008 stood at Rs. 8.98 crore, same as that at the end of last fiscal.

Deferred Tax Liability (net):

The Company has a deferred tax liability (net of deferred tax asset) of Rs.54.49 crore as on March 31, 2008 (Rs. 23.00 crore as on March 31, 2007). The primary reason for the increase in this item is the increase in foreign branch profit tax as on March 31, 2008 to Rs. 100.88 crore (Rs. 67.00 crore as on March 31, 2007).

Fixed Assets:

Addition to the Gross Block (excluding capital work-in-progress) in fiscal 2008 amounted to Rs. 943.87 crore (Rs. 639.95 crore in fiscal 2007).

The significant additions in fiscal 2008 were Leasehold and Freehold Land and Buildings, including Improvement of Leasehold Properties of Rs. 390.95 crore (Rs. 152.30 crore in fiscal 2007), additions on account of Office Equipment, Electrical Installations and Furniture and Fixtures of Rs.256.05 crore (Rs. 125.93 crore in fiscal 2007) and Computer Equipment Rs. 293.59 crore (Rs. 355.41 crore in fiscal 2007). The amount in capital work-in-progress (Rs. 889.74 crore as on March 31, 2008 against 757.85 crore as on March 31, 2007) mostly relates to construction/improvement of facilities which are expected to be ready for use in fiscal 2009 and beyond.

The Company made contractual commitments to vendors who are executing various infrastructure projects. The estimated amount of such contracts remaining to be executed on capital account and not provided for (net of advances) was Rs. 503.40 crore as on March 31, 2008 (Rs. 749.74 crore as on March 31, 2007).

The number of seats available in India as on March 31, 2008 was 89,622 (70,281 seats as on March 31, 2007).

Investments:

A summary of the Company's investments is given below:

Amount in Rs. Crore As at March 31, 2008 2007

Trade investments, Bonds & Debentures 2,108.32 2,098.61Investments in Mutual Funds 2,405.51 1,157.93Total Investments 4,513.83 3,256.54Less: Provision for diminution in value of investments 4.50 4.50Net Investments 4,509.33 3,252.04

The Company has been investing in various mutual funds. These are typically investments in short-term funds to gainfully use the excess cash balance with the Company. While investing in short-term instruments, the Company balances tax-efficient returns with risks involved in such investments. Investments in mutual funds aggregated Rs.2,405.51 crore as on March 31, 2008 (Rs.1,157.93 crore as on March 31, 2007).

A provision of Rs.4.50 crore towards impairment of investment in Exegenix Canada made in the books of erstwhile Tata Infotech Limited (TIL) prior to its merger with TCS has been retained in fiscal 2008 in 'Provision for diminution in value of investments'.

The Company has given undertakings to:

(1) Bank of China Co. Limited, not to transfer its controlling interest in Financial Network Services Pty Limited.

(2) The Government of Madhya Pradesh not to divest its shareholding in MP Online Limited except to an affiliate.

(3) State Bank of India not to sell, transfer or otherwise dispose of its share or any interest in CEdge Technologies Limited.

During fiscal 2008, the Company has made the following trade investments/divestments.

Investments/Divestitures:

Winding up of Tata Consultancy Services, France S.A. Details:

Tata Consultancy Services, France S.A., a subsidiary of TCS Limited has been dormant for some time. This was wound up on 8th February 2008 and the capital of Rs. 0.66 crore was extinguished. TKS Teknosoft, which was acquired by our subsidiary in Netherlands owns a subsidiary incorporated in France. Our operations in France have been consolidated and all the jobs in France are being carried out by this entity.

Investments/Divestitures:

Shares in Conscripty (Pty) Ltd.

Details:

In fiscal 2008, the Company sold 250 shares representing 20% of the shareholding interest in Conscripty (Pty) Ltd. This action was necessitated by a decision to set up a Company in South Africa with majority ownership of TCS Group which will front-end the operations in that country.

Investments/Divestitures:

Subscription of shares in Tata Consultancy Services (Africa) Pty Ltd.

Details:

The Company has subscribed to 60% share capital of Tata Consultancy Services (Africa) Pty Ltd. for a sum of Rs. 4.92 crore. The Company has been formed for providing IT services and investing in companies in South Africa.

Investments/Divestitures:

Setting up of Tata Consultancy Services (South Africa) Pty Ltd.

Details:

Tata Consultancy Services (Africa) Pty Ltd. has set up a 100% owned subsidiary, Tata Consultancy Services (South Africa) Pty Ltd, which will front-end the IT business of the Company in South Africa.

Investments/Divestitures:

Setting up of Tata Consultancy Services Morocco SARL - AV

Details:

The Company subscribed to 100% share capital of Tata Consultancy Services Morocco SARL - AV on June 21, 2007. This company was formed for providing a range of computer enabled services in Morocco.

Deferred Tax Assets (Net):

As on March 31, 2008 the Company had Rs.66.89 crore deferred Tax Assets (Net) (Rs.37.61 crore as on March 31, 2007). The increase is primarily attributable to provision for depreciation Rs.21.98 crore as on March 31, 2008 (R s.1.57 crore as on March 31, 2007) and a provision for doubtful debts of Rs.13.91 crore as on March 31, 2008 (Rs.9.98 crore as on March 31, 2007).

Inventories:

The Company had inventories of Rs.17.19 crore as on March 31, 2008 (Rs.12.06 crore as on March 31, 2007). The inventory constitutes raw materials, components, sub-assemblies and finished goods. The Inventory is higher as on March 31, 2008 as compared to March 31, 2007 primarily due to increase in raw materials, components and sub-assemblies inventory (Rs.12.32 crore as on March 31, 2008, Rs.8.62 crore as on March 31, 2007), an increase in goods in transit inventory (Rs. 2.66 crore as on March 31, 2008, Rs.0.60 crore as on March 31, 2007) offset by a reduction in stores and spares (R5.0.89 crore as on March 31, 2008, Rs.1.48 crore as on March 31, 2007).

Current Assets, Loans and Advances:

Unbilled Revenues:

Unbilled revenues comprise revenue recognised in relation to efforts incurred on Fixed-Price-Fixed-Time Contracts and Time and Material contracts not billed as of the year-end. Unbilled revenues stood at Rs.870.18 crore as on March 31, 2008 (Rs.523.88 crore as on March 31, 2007) representing 4.58% of the total income for fiscal 2008 (3.46% for fiscal 2007).

Sundry Debtors:

Sundry Debtors as on March 31, 2008 aggregated Rs.3,747.01 crore (Rs.2,799.80 crore as on March 31, 2007). Provision for bad and doubtful debts in fiscal 2008 was Rs.69.75 crore (Rs.59.39 crore in fiscal 2007). The amounts considered bad and doubtful as a percentage of total income was 0.37% in fiscal 2008 (0.39% in fiscal 2007).

Cash and Bank Balances:

The Company had Cash and Bank balance of Rs.527.52 crore as on March 31, 2008 (Rs.557.14 crore as on March 31, 2007). The balances with scheduled banks in India aggregated Rs.192.09 crore as on March 31, 2008 (Rs.274.18 crore as on March 31, 2007). The balances with foreign banks were Rs.333.78 crore as on March 31, 2008 (Rs.260.71 crore as on March 31, 2007).

Loans and Advances:

Loans and Advances as on March 31, 2008 were Rs.2,166.60 crore (Rs.1,313.39 crore as on March 31, 2007). Significant items of Loans and Advances were; loans to subsidiary companies Rs.446.74 crore (Rs.263.29 crore as on March 31, 2007), advances and loans to employees Rs.219.04 crore (Rs.200.00 crore as on March 31, 2007), advance tax including refunds receivable Rs.178.47 crore (Rs.98.94 crore as on March 31, 2007), loans & advances provided for miscellaneous purposes Rs.970.77 crore (Rs.751.16 crore as on March 31, 2007) and a MAT credit entitlement of Rs.351.58 crore (Rs.'Nil' as on March 31, 2007). The Increase in loans to subsidiary companies was mainly attributable to a loan of Rs.186.89 crore given to TCS Iberoamerica SA during fiscal 2008.

Current Liabilities:

Current Liabilities went up to Rs.2,404.18 crore as on March 31, 2008 as compared to Rs.1,639.50 as on March 31, 2007. This increase is primarily due to increase in Sundry Creditors from Rs.818.13 crore as on March 31, 2007 to Rs.1,239.37 crore as on March 31, 2008, increase in Advance Billing and Deferred Revenues from Rs.407.98 crore as on March 31, 2007 to Rs.460.55 crore on March 31, 2008, Payables to Subsidiary Companies which increased from Rs.165.64 crore as on March 31, 2007 to Rs.229.56 crore and Other Current Liabilities which increased from Rs.167.95 crore as on March 31, 2007 to Rs.426.01 crore as on March 31, 2008. The increase in Other Current Liabilities is mainly attributable to fair values of foreign exchange forward and currency option contracts of Rs.191.08 crore as on March 31, 2008 (Rs.17.29 crore as on March 31, 2007).

Provisions:

Provisions made towards taxes, employee retirement benefits, contingencies, proposed dividend, tax on dividend and warranties aggregated Rs.1,187.44 crore as on March 31, 2008 (Rs.905.05 crore as on March 31, 2007). The increase is mainly attributable to increase in provision for current income taxes of Rs.277.15 crore as on March 31, 2008 (Rs.156.20 crore as on March 31, 2007), employee benefits Rs.334.83 crore as on March 31, 2008 (Rs.289.71 crore as on March 31, 2007), increase in provision for the proposed dividend payout (including tax on dividend) Rs.572.47 crore as on March 31, 2008 (Rs.457.97 crore as on March 31, 2007).

CASH FLOW - TCS LIMITED (UNCONSOLIDATED):

The Company's growth has been financed largely by cash generated from operations. The Company has sufficient cash generated from operations for meeting its working capital requirements as well as the requirements for capital expenditure. In addition, the Company has short term working capital facilities with various banks.

As on March 31, 2008, the Company had available lines of credit with multiple bankers aggregating US$ 30 million, GBP 75 million and Rs.1,980 crore (comprising funded limit of Rs.1,520 crore and unfunded credit limits Rs.460 crore). Out of these limits, Rs.477.53 crore, US$ 6.57 million and GBP 75 million were utilised as on March 31, 2008.

Cash Flow from Operations:

Amount in Rs. croreParticulars Fiscal Fiscal Increase/ 2008 2007 (Decrease)

Profit before taxes and 5,003.86 4,170.68 833.18exceptional items

Depreciation 458.78 343.41 115.37

Others (93.95) (147.33) 53.38

Operating Profit before 5,368.69 4,366.76 1,001.93Working Capital Changes

Effect of Working (767.19) (451.41) (315.78)Capital Changes

Cash Generated from 4,601.50 3,915.35 686.15Operations

Tax Payments made (773.59) (364.09) (409.50)

Net cash provided by 3,827.91 3,551.26 276.65operating activities

In fiscal 2008 the Company generated net cash of Rs.3,827.91 crore (Rs.3,551.26 crore in fiscal 2007) from operating activities. Apart from profit before taxes and exceptional items of Rs.5,003.86 crore (Rs.4,170.68 crore in fiscal 2007), the net cash generated includes adjustments for non cash items like depreciation of Rs.458.78 crore (Rs.343.41 crore in fiscal 2007). Other significant items contributing in generation/use of cash from operating activities include changes in the current assets and current liabilities such as increase in unbilled revenues Rs.346.30 crore (Rs.169.97 crore in fiscal 2007), increase in debtors Rs.957.57 crore (Rs.474.73 crore in fiscal 2007), offset by a decrease in loans and advances Rs.106.18 crore (Rs.262.22 crore in fiscal 2007), increase in current liabilities and provisions Rs.647.99 crore (Rs.444.63 crore in fiscal 2007) and payment of income taxes Rs.773.59 crore (Rs.364.09 crore in fiscal 2007).

Cash Flow from Investing Activities:

Amount in Rs. croreParticulars Fiscal Fiscal Increase/ 2008 2007 (Decrease)

Purchase of Fixed Assets (1,075.76) (1,117.80) 42.04

Purchase of Trade Investments (4.92) (489.86) 484.94

Loans given to Subsidiaries (net) (196.41) (75.32) (121.09)

Sale of Investment in SITEL 4.23 76.98 (72.75)(2007)/Other Trade investments

Purchase of Other Investments (1,162.28) (498.66) (663.62)(net of Mutual Fund Dividends)

Other 30.24 28.24 2.00

Net cash used for investing (2,404.90) (2,076.42) (328.48)activities

In fiscal 2008 the Company used Rs.2,404.90 crore on investment activities (Rs.2,076.42 crore in fiscal 2007). The significant items in fiscal 2008 were, purchase of fixed assets Rs.1,075.76 crore (Rs.1,117.80 crore in fiscal 2007), purchase of trade investments Rs.4.92 crore Rs.489.86 crore in fiscal 2007), purchase of other investments net of mutual fund dividend Rs.1,162.28 crore (Rs.498.66 crore in fiscal 2007), loans given to subsidiaries Rs.196.41 crore (Rs.75.32 crore in fiscal 2007) and sale of the trade investment Rs.4.23 crore Rs. 76.98 crore in fiscal 2007). In fiscal 2007 the Company sold its stake in SITEL India for Rs. 76.98 crore.

Cash Flow from Financing Activities:

Amount in Rs. croreParticulars Fiscal Fiscal Increase/ 2008 2007 (Decrease)

Borrowings (net) (32.49) 15.24 (47.73)

Dividends paid including dividend (1,487.56) (1,087.10) (400.46)tax

Interest paid (3.30) (3.49) 0.19

Issue of Preference Shares 98.58 0.00 98.58(net of Issue Expenses)

Net cash used in financing (1,424.77) (1,075.35) (349.42)activities

In fiscal 2008 the significant items of cash used in financing activities were payment of dividend Rs.1,487.56 crore including tax (Rs.1,087.10 crore in fiscal 2007) and net repayments of Rs.32.49 crore (net additional borrowings of Rs. 15.24 crore in fiscal 2007). The Issue of Redeemable Preference Shares of Rs.100 crore generated Rs.98.58 crore of financing net of the share issue expenses.

TCS LIMITED (CONSOLIDATED):

The Management Discussion and Analysis below relates to the consolidated financial statements of TCS Limited and includes the results of its subsidiaries. The Discussion should be read in conjunction with the financial statements and related Notes to the Consolidated Accounts of TCS Limited for the year ended March 31, 2008.

1. RESULTS OF OPERATIONS - TCS LIMITED (CONSOLIDATED):

The table below gives an overview of the financial results of TCS Limited (Consolidated):

For the year ended For the year ended FY 2008 vs.March 31, 2008 March 31, 2007 2007

Income from Operations Rs. crore % of Rs. crore % of % Increase Income IncomeInformation technology 21,681.30 92.86 17,806.60 94.14 21.76and consultancy services

Sale of equipment and 1,182.09 5.06 878.61 4.65 34.54software licenses

Sub-total 22,863.39 97.92 18,685.21 98.79 22.36

Other Income (Net) 486.06 2.08 229.05 1.21 112.21

Total Income 23,349.45 100.00 18,914.26 100.00 23.45

Expenditure:

Employee costs 7,854.60 48.87 8,002.85 47.59 26.77

Overseas business 3,556.44 998.54expenses (employee allowances paid overseas)

Overseas business 438.42 1.88 370.00 1.96 18.49expenses (other than employee allowancespaid overseas)

Services rendered by 850.49 3.64 845.61 4.47 0.58business associates and others

Operation and Other 4,209.83 18.03 3,329.36 17.60 26.45Expenses

Total Expenditure 16,909.78 72.42 13,546.36 71.62 24.83

Profit before Interest, 6,439.67 27.58 5,367.90 28.38 19.97Depreciation, and Taxes

Interest 30.01 0.13 9.45 0.05 217.57

Depreciation 563.71 2.41 440.17 2.33 28.07

Profit before Taxes 5,845.95 25.04 4,918.28 26.00 18.86

Provision for Taxes: 760.11 3.26 644.10 3.41 18.01

Income tax expense(Including Deferred Tax Benefit and MAT Credit Entitlement)

Fringe Benefit Tax 26.20 0.11 19.86 0.11 31.92

Net Profit for the 5,059.64 21.67 4,254.32 22.49 18.93year before Minority Interest and share of profit of associate

Minority Interest (34.42) (0.15) (42.77) (0.23) (19.52)

Share of profit of 0.80 0.00 1.08 0.01 (25.93)associate

Net Profit for the 5,026.02 21.53 4,212.63 22.27 19.31year

1. 'Overseas Business Expenses' mainly comprise (a) subsistence allowances paid to employees assigned in overseas countries and the related visa expenses and (b) travelling and marketing related expenses incurred abroad. For the purpose of the above summary statement of Profit and Loss Account, the component of overseas business expenses relating to employee costs in (a) above has been grouped with employee costs for ease of comparison of employee related costs in fiscal 2007 and 2008.

2. A significant feature of fiscal 2008 is the volatility in foreign currency exchange rates adversely affecting the export oriented industries. TCS Ltd earns its revenues in US Dollar, GB Pound, Euro and multiple other foreign currencies. During the fiscal 2008, vis-a-vis Indian Rupee, US Dollar fell by 11.05%, GBP fell by 5.64% and Euro fell by 1.76% on the basis of average daily closing prices. Revenues in foreign currencies constituted 90.3% in fiscal 2008. Revenues in US$ were 57.5% of total revenues. Consequently, revenues in Indian Rupee got adversely affected. Expenditure in foreign currencies constituted 49.4% of the total expenditure in fiscal 2008-providing a relatively narrow natural hedge to the exchange rate risk in the business. These factors resulted in relatively lower growth in revenues. However, the growth in expenditure, in absolute value and also in proportion to revenues went up. The Company, through its superior management of currency exchange risk, could mitigate the impact partially.

3. In the summary of results given above, numbers for the fiscal 2007 as well as fiscal 2008 have been regrouped for ease of comparison.

Income:

Income from Operations:

The Company's revenues increased in fiscal 2008 to Rs.22,863.39 crore - a growth of 22.36% from Rs.18,685.21 crore in fiscal 2007. Information Technology and Consultancy Services revenues were 92.86% of total income (94.14% in fiscal 2007) and increased by 21.76% to Rs. 21,681.30 crore in fiscal 2008 from Rs.17,806.60 crore in fiscal 2007.

Consolidated revenues from sale of equipment and software licenses increased by 34.54% to Rs.1,182.09 crore in fiscal 2008 from Rs.878.61 crore in fiscal 2007. The growth is mainly due to increase in the domestic system integration contracts in fiscal 2008. These revenues were 5.06% of total income (4.65% in fiscal 2007).

The increase in revenues in fiscal 2008 as compared to that of fiscal 2007 is mainly attributable to growth in volume of business (27.75%), improvement in billing rates (6.04%), offset by impact of exchange rate variation net of cash flow hedges (-9.65%) and mix in favour of off-shore revenue (-1.44%). The negative effect of off-shore revenue is planned and has positive effect on the profit of the Company.

Revenue by Segments:

The classification of revenues by geography and industry practice is more relevant when viewed as consolidated results of the Company.

Revenue by Geography:

Geography 2007-08 2006-07 % Of % Of Revenue Revenue

Americas 50.77 52.43UK 19.78 20.29Europe 9.21 8.19Iberoamerica 4.40 3.85India 8.95 9.00Asia Pacific 5.20 4.78ME/Africa 1.69 1.46Total 100.00 100.00

While the business growth in the major markets (in absolute terms) that is Americas and the United Kingdom is in line with the Company's plans, the Company has been successfully focusing on higher growth in Europe, Iberoamerica, Asia Pacific and Middle East and Africa. As a result of this strategy, though the Company's business continues to grow in Americas and the United Kingdom, the growth from the emerging markets is relatively faster.

Revenue by Significant Industry Practice:

Industry Practice 2007-08 2006-07 % Of % Of Revenue Revenue

BFSI 44.14 43.89Telecom 16.15 16.09Manufacturing 9.82Hi-tech 3.11Total Manufacturing 12.93 12.72Retail and Distribution 6.45 5.90Others 20.33 21.40Total 100.00 100.00

The Company's business in the Banking, Financial Services and Insurance (BFSI) segment continues to be its biggest Practice. In spite of the challenges in the financial sector, the Company's business with its clients in BFSI vertical continues to be stable. Telecom and Retail business segments have grown significantly.

Revenue by Significant Services:

Service Lines 2007-08 2006-07 % Of % Of Revenue Revenue

IT Solutions and Services:Application Development and Maintenance 48.3 52.2Business Intelligence 9.7 9.5Enterprise Solutions 13.1 12.2Assurance Services 3.8 2.3Subtotal IT Solutions and Services 74.9 76.2Engineering and Industrial Services 5.4 5.8Infrastructure Services 6.5 6.0Global Consulting 3.4 3.4Asset Leverage Solutions 3.6 2.8Business Process Outsourcing 6.2 5.8Total Revenue 100.0 100.0

The Company's newer service offerings such as Infrastructure Services, Global Consulting, Assurance Services and BPO have been showing significant growth.

Other Income:

Consolidated 'Other Income' in fiscal 2008 increased to Rs.486.06 crore - up from Rs.229.05 crore in fiscal 2007. In terms of total income, 'Other Income' has gone up from 1.21 % in fiscal 2007 to 2.08% in fiscal 2008. Primary reasons for the increase are:

(a) Exchange gain (net) of Rs.256.62 crore in fiscal 2008 (Rs.46.09 crore in fiscal 2007) as a result of successful implementation of our foreign exchange hedging strategy in a volatile currency environment.

(b) Dividend income of Rs.107.98 crore in fiscal 2008 (Rs.38.22 crore in fiscal 2007) arising out of useful deployment of available funds primarily in Mutual Funds.

(c) Profit on sale of Mutual Funds and other current investments Rs.15.89 crore (Rs.10.07 crore in fiscal 2007).

(d) Increase in interest Income (net of tax deducted at source) of Rs.56.99 crore (Rs.21.71 crore in fiscal 2007).

In fiscal 2008 there is no item similar to profit on sale of investment in SITEL India of Rs.66.90 crore (net of adjustment of negative net worth of SITEL).

The policy and accounting treatment of derivative instruments have been covered in the discussions for unconsolidated financials.

In fiscal 2008, the net gain on maturity of effective hedge instruments taken to revenues was Rs.243.86 crore as compared to Rs.17.19 crore in fiscal 2007.

In fiscal 2008, the net gain on all other derivative instruments aggregated Rs.283.96 crore and was taken to 'other income', as compared to a net gain of Rs.45.13 crore in the previous year. Effect of revaluation of foreign currency monetary items at closing rates was a loss of Rs.30.34 crore (gain of Rs.0.96 crore in fiscal 2007), resulting in net exchange gain of Rs.256.62 crore in fiscal 2008 (gain of Rs.46.09 crore in fiscal 2007).

Expenditure:

Employee Costs and Overseas Business expenses:

The consolidated total employee costs for fiscal 2008 was Rs.11,411.04 crore, an increase of 26.77% over Rs.9,001.39 crore in fiscal 2007. Employee costs as a percentage of total income was 48.87% in fiscal 2008 (47.59% in fiscal 2007). This increase is attributable to the relative increase in the headcount and compensation package commensurate with the market and adverse effect of currency exchange fluctuations on revenues. Revenues in foreign currencies constitute more than 90% of total revenues whereas the total employee cost in foreign currencies is 54.46% of total revenues providing inadequate natural hedge to the foreign currency dominated revenues.

Utilisation of manpower resources including trainees was 75.8% as on March 31, 2008 (74.7% as on March 31, 2007). The utilisation excluding trainees was 79.1% as on March 31, 2008 (79.6% as on March 31, 2007).

Overseas Business Expenses (other than employee costs):

Expenses on this account went up by 18.49%, from Rs.370.00 crore in fiscal 2007 to Rs.438.42 crore in fiscal 2008. In terms of total income, it went down from 1.96% in fiscal 2007 to 1.88% in fiscal 2008. Travel related to overseas business which constitutes the largest component of these overseas business expenses increased from Rs.225.87 crore in fiscal 2007 (1.19% of total income) to Rs. 274.10 crore in fiscal 2008 (1.17% of total income).

Services rendered by business associates and others:

Expenses on this score went up from Rs.845.61 crore in fiscal 2007 to Rs.850.49 crore in fiscal 2008. Expressed as a percentage of total income, expenses on this account went down from 4.47% in fiscal 2007 to 3.64% in fiscal 2008. This decrease is attributable to periodic reviews of the need for these associates and the availability of the required skill-sets within the Company.

Other Operation and Other Expenses:

For the year ended March 31, 2008 March 31, 2007Nature of Expenses Rs. % of Rs. % of Crore income Crore income

Software, hardware and material costs 1,068.26 4.58 819.12 4.33Cost of software licences 466.23 2.00 318.22 1.68Communication expenses 308.42 1.32 237.83 1.26Travelling and conveyance expenses 419.45 1.80 346.02 1.83Rent 423.85 1.82 300.77 1.59Legal and professional fees 198.33 0.85 196.03 1.04Repairs and maintenance 145.53 0.62 122.15 0.65Electricity expenses 158.22 0.68 115.86 0.61Recruitment and training expenses 173.03 0.74 144.80 0.77All Other Expenses 848.51 3.63 728.56 3.85Total Other Expenses 4,209.83 18.03 3,329.36 17.60

Operating and Other Expenses have increased from Rs.3,329.36 crore in fiscal 2007 to Rs. 4,209.83 crore in fiscal 2008. In terms of total income, this has increased from 17.60% in fiscal 2007 to 18.03% in fiscal 2008. The items of expenses which have shown relatively more increase are:

(1) Higher software, hardware and material costs incurred for the bought out components in execution of systems integration contracts in fiscal 2008 as compared to fiscal 2007 on account of higher volume of systems integration business,

(2) Hher expenditure on software licenses on account of increased volume of software business.

(3) Higher rental and electricity expenses for additional leased premises taken.

(4) Communication expenses due to increased levels of business and increased use of tele-conferencing and video-conferencing.

'All Other Expenses' in terms of total income in fiscal 2008 has come down to 3.63% as compared to 3.85% in fiscal 2007.

Profit before Interest, Depreciation and Taxes:

The profit before interest, depreciation, taxes (PBIDT) in fiscal 2008 was Rs.6,439.67 crore, an increase of 19.97% from Rs.5,367.90 crore in fiscal 2007. The profit as a percentage of total income was 27.58% in fiscal 2008 (28.38% in fiscal 2007). The decline in the PBIDT as a percentage of total income in fiscal 2008 is attributable to appreciation of Indian Rupee vis-a-vis US Dollar and some other major currencies, increase in operating cost, particularly employee costs and increase in other operating costs mainly arising out of expanded capacities created. This reduction in PBIDT as a percentage of total income is attributable to an increase in employee cost 1.28% and operation and other expenses 0.43% offset by a reduction in services rendered by business associates and others of 0.83% and lower 'Overseas Business Expense (other than employee related expenses)' of 0.08% in fiscal 2008 as compared to fiscal 2007.

Interest Costs:

Interest Costs increased from Rs. 9.45 crore in fiscal 2007 to Rs. 30.01 crore in fiscal 2008. In terms of percentage of total income, interest has gone up from 0.05% in fiscal 2007 to 0.13% in fiscal 2008. The increase in interest cost is attributable to the US$ 100 million borrowed by one of our subsidiaries, towards the end of fiscal 2007.

Depreciation:

Depreciation charge has increased from Rs. 440.17 crore in fiscal 2007 to Rs. 563.71 crore in fiscal 2008 - an increase of 28.07%. In terms of total income the depreciation charge was 2.33% in fiscal 2007 and 2.41 in fiscal 2008. The increase is attributable to substantial additions to the infrastructural facilities and hardware bought for internal consumption during the fiscal.

Profit before Taxes:

The Profit before Taxes in fiscal 2008 was Rs.5,845.95 crore, an increase of 18.86% from - Rs.4,918.28 crore in fiscal 2007. In terms of total income the profit went down from 26.00% in fiscal 2007 to 25.04% in fiscal 2008. The decline in profit before tax can be attributed to lower PBDIT of 0.80% and higher depreciation and interest costs of 0.16%.

Provision for Taxation:

Income tax expense comprises tax on income from operations in India and foreign tax jurisdictions. Income tax payable in India is determined in accordance with the provisions of the Income Tax Act, 1961. Tax expenses relating to overseas operations are determined in accordance with tax laws applicable in countries where such operations are carried out.

The Company benefits in India from certain tax incentives as explained earlier. The Minimum Alternative Tax and Fringe Benefit Tax applicable to the Company have been explained earlier.

The Company's consolidated tax expense (including Fringe Benefit Tax and MAT credit entitlement) in fiscal 2008 increased to Rs.786.31 crore from Rs.663.96 crore in fiscal 2007. This represented 3.37% of the total income in fiscal 2008 (3.51 %in fiscal 2007). The reduction in tax expense as a percentage of total income is primarily attributable to write-back of Rs.37.52 crore arising out of a review of the tax positions.

Net Profit before Minority Interest and Share of Profit of Associates:

The Company's net profit before minority interest went up from Rs.4,254.32 crore in fiscal 2007 to Rs.5,059.64 crore in fiscal 2008. Net profit margin on the total income went down from 22.49% in fiscal 2007 to 21.67% in fiscal 2008. The reduction in net profit margin of 0.82% is attributable to a decline of PBT of 0.96% offset by lower net taxes of 0.14% in fiscal 2008 as compared to fiscal 2007.

Minority Interest:

Minority Interest is that part of the net profit attributable to third party ownership interests in the Company's subsidiaries.

The charge on the Company's net profit on account of Minority Interests registered a decline from Rs.42.77 crore in fiscal 2007 to Rs.34.42 crore in fiscal 2008. Minority Interest Charge as a percentage of total income went down from 0.23% in fiscal 2007 to 0.15% in fiscal 2008, due to consolidation of the Company's Brazilian subsidiaries, resulting in buyout of the minority shareholding of third party ownership interest in fiscal 2008.

Share of Profit of Associate:

The Company has Investments in other companies in which it has significant influence by virtue of ownership of 20% to 50% in the equity capital of the said Companies. In its consolidated books of accounts the Company recognises its share of income or loss in the investee companies on the principles of equity method of accounting.

The Company's share of profit of associates as a result of such minority shareholding was Rs.0.8 crore in fiscal 2008 as compared to a profit of Rs.1.08 crore in fiscal 2007.

Net Profit:

The Company's net profit (Consolidated) registered a growth of 19.31% from Rs.4,212.63 crore in fiscal 2007 to Rs.5,026.02 crore in fiscal 2008. Net profit margin on the total income went down from 22.27% in fiscal 2007 to 21.53% in fiscal 2008. The reduction in net profit margin for fiscal 2008 of 0.74% as compared to fiscal 2007 is attributable to a decline of profit before minority interest and share of profit of associate of 0.82% and increase due to reduction in share of minority interest of 0.08% in fiscal 2008.

2. FINANCIAL POSITION - TCS LIMITED (CONSOLIDATED):

Share Capital:

Amount in Rs. crore As at As at March 31, March 31, 2008 2007

Authorised Share Capital 220.00 120.00Issued, Subscribed and Paid up Share Capital 197.86 97.86

On March 28, 2008, 100 crore of Cumulative Redeemable Preference Shares of face value of Re.1/- each were allotted to Tata Sons Ltd. These shares would be redeemable at par at the end of six years from the date of allotment but may be redeemed at any time after three years from the date of allotment at the option of the shareholder. These shares would carry a fixed cumulative dividend of 1% per annum and a variable non-cumulative dividend of 1% of the difference between the rate of dividend declared during the year on the equity shares of the Company and the average rate of dividend declared on the equity shares of the Company for three years preceding the year of issue of the Cumulative Redeemable Preference Shares.

Authorised share capital as on March 31, 2008 was Rs.220 crore (Rs.120 crore as on March 31, 2007). Authorised Share Capital was increased by Rs.100 crore enabling the Company to issue 100 crore 'Cumulative Redeemable Preference Shares' of Re.1/- each pursuant to a shareholders' resolution passed by postal ballot on March 17, 2008.

The issued, subscribed and paid-up share capital as on March 31, 2008 comprised Rs.97.86 crore of equity shares of face value Re.1/- each and Rs.100.00 crore of cumulative redeemable preference shares of face value Re.1/- each.

Reserves and Surplus:

Securities Premium Account as on March 31, 2007 stood at Rs.2,017.75 crore. As on March 31, 2008 the balance in this account stood at Rs.2,016.33 crore, net of preference share issue expenses of Rs.1.42 crore.

Arising out of the revision in the Accounting Standard 15 effective April 1, 2006, relating to employee benefits, the Company had reviewed and revised its accounting policy in respect of employee benefits and identified Rs.142.61 crore (net of deferred tax) as transitional provision which was adjusted against the opening balance in the General Reserves as on April 1, 2006. Consequent to the Guidance on Accounting Standard 15 which clarifies the applicability of the said Accounting Standard, the Company has identified certain entitlements to earned leave which can be carried forward to the future periods as long term employee benefits. As a result, the reduction in the liability of Rs.31.25 crore on April 1, 2006 has been added to General Reserves in fiscal 2008.

Out of the profits in fiscal 2008, an amount of Rs.454.51 crore (Rs.382.14 crore in fiscal 2007) representing 10% of the net profits has been transferred to General Reserves resulting in a closing balance of Rs.1,406.81 crore as on March 31, 2008 (Rs.921.05 crore as on March 31, 2007).

Balance in the Profit and Loss Account as on March 31, 2008 stood at Rs.8,688.21 crore (Rs.5,721.12 crore as on March 31, 2007).

Foreign Currency Translation Reserve was Rs.0.64 crore as on March 31, 2008 (Rs.13.19 crore as on March 31, 2007). Foreign Currency Translation Reserve of Rs. 0.64 crore is primarily on account of Mark to Market valuation of loan extended to overseas subsidiaries and adjustments arising out of translation of subsidiaries financials during consolidation.

Profit/Loss on Cash Flow Hedges stood at a loss of Rs.15.15 crore as on March 31, 2008 (Rs.73.71 crore profit as on March 31, 2007). The loss represents effect of mark to market valuation of cash flow hedges taken for projected revenues.

Reserves and Surplus at the end of fiscal 2008 stood at Rs.12,102.26 crore - an increase of 38.28% over Rs.8,752.24 crore at the end of fiscal 2007.

Loans:

Secured Loans at the end of fiscal 2008 were Rs.18.07 crore (Rs.63.09 crore as on March 31, 2007). Short-term loans from banks were 'Nil' as on March 31, 2008 (Rs.15.00 crore as on March 31, 2007). Bank overdraft was Rs.9.27 crore as on March 31, 2008 (Rs.44.52 crore as on March 31, 2007). Short-term loans and bank overdrafts are secured by domestic book debts, hypothecation of inventories and other current assets. Obligations under finance lease stood at Rs. 8.80 crore as on March 31, 2008 (Rs.3.57 crore as on March 31, 2007). Obligations under finance lease are secured against fixed assets obtained under finance lease agreement.

Unsecured Loans at the end of fiscal 2008 were Rs.436.95 crore, against Rs.443.66 crore at the end of the fiscal 2007. Loans from banks as on March 31, 2008 were at Rs.422.29 crore (March 31, 2007 were Rs.434.70 crore). These were commercial borrowings taken by the Company and by its North American subsidiary. Unsecured loans from others were Rs.14.66 crore as on March 31, 2008 (Rs.8.96 crore as on March 31, 2007).

Deferred Tax Liability (Net):

The Company has deferred tax liability (net) of Rs.140.22 crore (Rs.71.70 crore as on March 31, 2007) . The primary reason for the increase in deferred tax liabilities in fiscal 2008 is attributable to increased liabilities represented by Foreign Branch Profit Tax of Rs.100.88 crore as on March 31, 2008 (Rs.67.00 crore as on March 31, 2007).

Fixed Assets:

Addition to the Gross Block excluding capital work-in-progress in fiscal 2008 amounted to Rs.1,157.15 crore (Rs.1,250.40 crore in fiscal 2007). The significant items of additions in fiscal 2008 were:

(a) Leasehold and Freehold Land & Buildings Rs.398.62 crore (Rs.115.32 crore in fiscal 2007),

(b) Improvement of Leasehold Properties Rs.89.19 crore (Rs. 51.96 crore in fiscal 2007),

(c) Electrical Installations and Furniture and Fixtures Rs.202.84 crore (Rs.99.17 crore in fiscal 2007),

(d) Office Equipments Rs.124.27 crore (Rs.70.17 crore in fiscal 2007), and

(e) Computer Equipments Rs.338.50 crore (Rs.387.33 crore in fiscal 2007).

The amount in capital work-in-progress was Rs.906.87 crore as on March 31, 2008 (Rs.793.04 crore as on March 31, 2007) mostly related to construction/improvement of facilities which are likely to be ready for use in fiscal 2009 and beyond.

The Company made contractual commitments to vendors who are executing various infrastructure projects. The estimated amount of such contracts remaining to be executed on capital account and not provided for (net of advances) was Rs.515.88 crore as on March 31, 2008 (Rs.758.22 crore as on March 31, 2007).

Goodwill on Consolidation:

Goodwill on consolidation as at March 31, 2008 was Rs.1,264.95 crore (March 31, 2007 was Rs.1,068.34 crore). The Company, through its wholly owned subsidiary, Tata Consultancy Services Do Brasil Desenvolvimento De Servicos Ltda, acquired 100% equity interest in a Brazil based company, GT Participacoes S.A. on May 25, 2007. Consequently, the Company's holding in Tata Consultancy Services Do Brasil S.A. has increased to 100%. As a result of the consolidation of the Brazilian Subsidiaries, a Goodwill of Rs.118.27 crore has been recognised in the consolidated financials. During the year the Company's liabilities towards the erstwhile owner of Comicron (our Chile based BPO acquisition) and translation adjustments to Comicron's Goodwill amounted to Rs.54.12 crore. All other changes in the Goodwill on consolidation are attributable to the exchange difference on Goodwill for our subsidiaries.

Investments:

A summary of the investments is as follows:

Amount in Rs. crore As at As at March 31, March 31, 2008 2007

Investments in fully paid up 5.61 9.31equity shares of associates andothers (Unquoted)

Investments in fully paid up preference 9.28 9.25shares of associates and others (Unquoted)

Investments in Bonds and Debentures 43.14 29.26(Quoted)

Investments in Bonds and Debentures 0.10 0.11(Unquoted)

Investments in Mutual Funds 2,548.03 1,208.94(Unquoted)

Total Investments 2,606.16 1,256.87

Less: Provision for diminution in - -value of investments

Net Investments 2,606.16 1,256.87

The Company has been investing in various mutual funds. These are typically investments in short-term funds to gainfully use the investible cash balance with the Company. While investing in short-term instruments, the Company balances tax-efficient returns with risks involved in such investments. Investments in mutual funds aggregated Rs.2,548.03 crore as on March 31, 2008 (Rs.1,208.94 crore as at March 31, 2007).

During fiscal 2008, the Company has made the following trade investments/divestments/mergers/consolidations through its subsidiaries.

Investments/Divestitures/Mergers/Consolidations:

Consolidation of companies acquired in Switzerland into TCS Switzerland

Details:

On April 01, 2007 TKS Services S.A., Quartz Software Technology SA and Tata Consultancy Services Financial Solutions Limited have merged with Tata Consultancy Services Switzerland Limited.

Investments/Divestitures/Mergers/Consolidations:

Consolidation of Brazilian operations into TCS' Brazilian Subsidiary

Details:

The Company, through its wholly owned subsidiary, Tata Consultancy Services Do Brasil Desenvolvimento De Servicos Ltda, acquired 100% equity interest in a Brazil based Company, GT Participacoes S.A. on May 25, 2007. Consequently, the Company's holding in Tata Consultancy Services Do Brasil S.A. has increased to 100%.

Tata Consultancy Services Do Brasil Desenvolvimento De Servicos Ltda and GT Participacoes S.A. have merged with Tata Consultancy Services Do Brasil Ltda, effective July 1, 2007.

Investments/Divestitures/Mergers/Consolidations:

Acquisition of 100% voting rights in TCS Financial Management LLC.

Details:

The Company, through its wholly owned subsidiary, Tata America International Corporation (TAIC), acquired 100% voting power in TCS Financial Management LLC, on July 13, 2007.

Investments/Divestitures/Mergers/Consolidations:

Divestment of interests in two subsidiaries in Iberoamerica

Details:

The Company, through its wholly owned subsidiary, TCS Iberoamerica SA., sold its shareholding interest in two subsidiaries Pentacrom S.A. and

Pentacrom Servicios S.A. (PENTACROM):

Discussions on the unconsolidated accounts cover the investments made directly by TCS Limited.

Deferred Tax Asset (Net):

The Company has deferred tax asset (net) of Rs.107.19 crore (Rs.72.44 crore as at March 31, 2007). The primary reasons for increase in deferred tax asset is attributable to the difference in provision for depreciation Rs.10.62 crore (Rs.-8.55 crore as at March 31, 2007), deferred tax asset created for employee benefits Rs.47.66 crore (Rs.39.59 crore as at March 31, 2007) and provision for doubtful debts Rs. 17.73 crore (Rs.14.41 crore as on March 31, 2007).

Inventories:

The Company had inventories of Rs.42.43 crore as at March 31, 2008 (Rs.41.60 crore as at March 31, 2007). The inventory constitutes raw materials, components, sub-assemblies and finished goods.

Current Assets, Loans and Advances:

Unbilled Revenues:

Unbilled revenues stood at Rs.1,352.50 crore as at March 31, 2008 (Rs.783.50 crore as at March 31, 2007) representing 5.79% of the annual income for fiscal 2008 (4.14% as at March 31, 2007).

Sundry Debtors:

Sundry Debtors as at March 31, 2008 aggregated Rs.5,378.07 crore (Rs.4,297.93 crore as at March 31, 2007). As a percentage of total income, sundry debtors were at 23.03% as at March 31, 2008 as compared to 22.72% as at March 31, 2007. The cumulative provision towards bad and doubtful debts as on March 31, 2008 stood at Rs.106.26 crore (Rs.96.84 crore as at March 31, 2007).

Cash and Bank Balances:

The Company had Cash & Bank balance of Rs.1,223.40 crore as at March 31, 2008 (Rs.1,396.45 crore as at March 31, 2007). Of this balance, Rs.983.51 crore was held in foreign bank accounts as at March 31, 2008 (Rs.906.75 crore as at March 31, 2007).

Loans and Advances:

Loans and Advances as on March 31, 2008 were Rs.2,033.03 crore (Rs.1,306.57 crore as at March 31, 2007). Significant items of loans and advances were, advances and loans to employees Rs. 235.87 crore (Rs.201.48 crore as at March 31, 2007), advances recoverable in cash or kind or for value to be received Rs.1,176.42 crore (Rs.955.76 crore as at March 31, 2007), advance tax (including refunds receivable) Rs.269.16 crore (Rs.149.33 crore as at March 31, 2007) and a MAT credit entitlement of Rs.351.58 crore (Rs.'Nil' as at March 31, 2007).

Current Liabilities:

Current liabilities went up to Rs.3,190.57 crore as at March 31, 2008 as compared to Rs.2,471.79 crore as at March 31, 2007. This increase is primarily due to increase in sundry creditors - Rs.1,887.94 crore as at March 31, 2008 (Rs.1,329.61 crore as at March 31, 2007) and an increase in advance billing and deferred revenues Rs.656.03 crore as at March 31, 2008 (Rs.530.04 crore as at March 31, 2007). The balance in other current liabilities as at March 31, 2008 stood at Rs 563.75 crore (Rs.423.04 crore on March 31, 2007). The increase in creditors is attributable to the higher volume of business.

Provisions:

Provisions made towards taxes, employee retirement benefits, contingencies, proposed dividend, tax on dividend and warranties aggregated Rs.1,286.61 crore as at March 31, 2008 as against Rs.1,023.66 crore as at March 31, 2007. The increase is mainly attributable to increased provision for the proposed dividend payout including the tax on dividend Rs.575.30 crore as at March 31, 2008 (Rs.460.03 crore as at March 31, 2007), increased provision for current income taxes Rs.311.28 crore (Rs.171.57 crore as at March 31, 2007) and employee benefits of Rs.387.51 crore (Rs.364.61 crore as at March 31, 2007).

3. CASH FLOW - TCS LIMITED (CONSOLIDATED):

Cash Flow from Operations (Consolidated):

Amount in Rs. crore Fiscal Fiscal Increase/ 2008 2007 (Decrease)

Profit before taxes and 5,845.95 4,918.28 927.67exceptional items

Depreciation 563.71 440.17 123.54

Others (159.71) (183.01) 23.30

Operating Profit before 6,249.95 5,175.44 1,074.51Working Capital Changes

Effect of Working Capital (1,253.03) (1,053.72) (199.31)Changes

Cash generated from 4,996.92 4,121.72 875.20Operations

Tax payments made (1,090.14) (649.85) (440.29)

Net cash provided by 3,906.78 3,471.87 434.91operating activities

In fiscal 2008 the Company generated net cash of Rs.3,906.78 crore (Rs.3,471.87 crore in fiscal 2007) from operating activities. Apart from profit before taxes of Rs.5,845.95 crore (Rs.4,918.28 crore in fiscal 2007), the net cash generated includes adjustments for non cash items like depreciation Rs.563.71 crore (Rs.440.17 crore in fiscal 2007). Other significant items contributing to generation/use of cash from operating activities include changes in the current assets and current liabilities such as increase in unbilled revenues Rs.569.00 crore (Rs.304.35 crore in fiscal 2007), increase in debtors Rs.1,103.12 crore (Rs.966.96 crore in fiscal 2007), decrease in loans and advances 137.78 crore (Rs.286.79 crore in fiscal 2007) , increase in current liabilities and provisions Rs.557.70 crore (Rs.465.34 crore in fiscal 2007) and payment of income taxes Rs.1,090.14 crore (Rs.649.85 crore in fiscal 2007).

Cash Flow from Investing Activities (Consolidated): Amount in Rs. crore Fiscal Fiscal Increase/ 2008 2007 (Decrease)

Purchase of Fixed Assets (1,270.98) (1,248.59) (22.39)

Purchase of Other (1,247.18) (495.68) (751.50)Investments

Acquisition of (156.84) (180.41) 23.57Subsidiaries (net ofcash acquired ofRs.207.33 crore)(including additionalconsideration)

Sale of Investment in - 72.42 (72.42)Joint venture SITEL(net of cash ofRs.4.56 crore)

Other 56.31 38.62 17.69

Net cash used for (2,618.69) (1,813.64) (805.05)Investing activities

In fiscal 2008 the Company used Rs.2,618.69 crore on investment activities (Rs.1,813.64 in fiscal 2007). The significant items of cash used in investment activities in fiscal 2008 are (a) purchase of fixed assets Rs.1,270.98 crore (Rs.1,248.59 crore in fiscal 2007), (b) acquisition of subsidiaries (net of cash) of Rs.156.84 crore (Rs.180.41 crore in fiscal 2007) and (c) purchase of other investments Rs.1,247.18 crore (Rs.495.68 crore in fiscal 2007). In fiscal 2007 the sale of the Company's investment in SITEL (India) generated Rs.72.42 crore (net of cash of Rs.4.56 crore) (Rs.'Nil' in fiscal 2008). Other cash flows from investment activities included proceeds from sale of assets, sale of investment in associate, advance against investment in mutual fund, dividend, interest and inter-corporate deposits received Rs.56.31 crore in fiscal 2008(Rs.38.62 crore in fiscal 2007).

Consolidated Cash Flow from financing activities:

Amount in Rs. crore Fiscal 2008 Fiscal 2007 Increase/ (Decrease)

Proceeds from issue of shares by 3.28 21.13 (17.85)subsidiaries

Borrowings (net) (21.25) 392.54 (413.79)

Dividends paid including dividend (1,489.62) (1,088.16) (401.46)tax

Dividends paid to a minority (5.90) (3.68) (2.22)shareholder of a subsidiary

Interest paid (26.12) (8.65) (17.47)

Issue of preference shares (net 98.58 - 98.58of issue expenses)

Net cash used in financing (1,441.03) (686.82) (754.21)activities

In fiscal 2007, the significant item of cash used in financing activities was payment of dividend including tax Rs.1,489.62 crore (Rs.1,088.16 crore in fiscal 2007). Borrowings aggregated repayment of Rs.21.25 crore in fiscal 2008 (additional borrowing of Rs.392.54 crore in fiscal 2007). During fiscal 2008 the issuance of preference shares (net of issue expenses) to Tata Sons Limited generated Rs.98.58 crore (Rs.'Nil' in fiscal 2007).

Cash Position:

Cash and cash equivalents as on March 31, 2008 amounted to Rs.1,223.40 crore (Rs.1,396.45 crore as at March 31, 2007).

Company's Consolidated Performance Trend Analysis:

Trend with respect to some of the key financial and operational data are provided in the following table:

Item Units FY 2004-05 FY 2005-06 FY 2006-07 FY 2007-08

Total Revenue Rs. crore 9,748.47 13,252.15 18,685.21 22,863.39

Export Revenue Rs. crore 8,560.90 11,595.37 17,003.22 20,817.77

% of Export to % 87.82% 87.50% 91.00% 91.05%Total Turnover

PBIDT Rs. crore 2,909.96 3,798.19 5,367.90 6,439.67 PBIDT Margin % 29.85% 28.66% 28.73% 28.17%

PAT Rs. crore 1,976.90 2,966.74 4,212.63 5,026.02 PAT Margin % 20.28% 22.39% 22.55% 21.98%

EPS-Adjusted Rs. 20.20 30.32 43.05 51.36for Bonus Shares in fiscal 2007

Return on % 67.34% 60.86% 58.16% 55.05%Capital Employed

Return on % 56.85% 49.46% 47.60% 40.86%Equity

No. of 45715 66480 89419 111407Employees

Revenue Per Rs. '000 2,132.44 1,993.40 2,089.62 2,052.24Employee

Revenue Rs. crore 3,772.66 4,956.30 7,567.51 9,579.76from Offshore Business

Revenue % 38.70% 37.40% 40.50% 41.90%from Offshore Business %

Economic Rs. crore 1,513.61 2,254.41 3,082.95 3,558.04Value Added (Unconso-lidated)

Economic % 18.90% 20.07% 20.64% 19.20%Value Added %

Revenue by Geographic segments: Americas % 59.20% 59.06% 56.27% 55.16% Europe % 23.08% 22.40% 28.47% 28.99%

India % 12.18% 12.50% 9.00% 8.95% Others % 5.54% 6.04% 6.26% 6.90%

Share No. crore 48.01 48.93 97.86 197.86Capital

Reserves Rs. crore 3,429.53 5,949.88 8,752.24 12,102.26and Surplus

Gross Block Rs. crore 1,170.65 1,951.04 3,197.71 4,291.80

Total Rs. crore 1,404.42 1,963.52 3,252.04 4,509.33Investments (Unconsol-idated)

Net Current Rs. crore 1,797.09 2,876.18 4,331.11 5,553.32Assets

Graphical presentation of trends with respect to some of the key financial and operational data is provided below:

CAGR = 23.8%

Total Revenue Vs. Export Revenue:

PAT t PAT Margin

The Company has registered healthy growth in total revenues as well as export revenues. Compounded Annual Growth Rate (CAGR) of total revenues has been Annual Growth Rate (CAGR) of total revenues has been 23.8%. The Company continues to be the largest IT service exporter in India.

Profit After Tax:

PAT of the Company has grown 2.5 times over the last four years. The margin remains steady even in adverse conditions.

Profit Before Interest Depreciation and Tax:

PBIDT of the Company has more than doubled in the last four years. The margin remains steady even in adverse conditions.

Earnings Per Share:

The Company's Earnings per Share has grown more than 2.5 times over the last four years.

Revenue Per Employee: Number of Employees has been growing consistently indicating steady growth in the business of the Company. Revenue per Employee has remained healthy due to optimum utilisation of resources.

Revenue from Offshore Business:

The Company's offshore business is showing a steady upward trend. This is in line with the Company's plans to increase the offshore component.

Economic Value Added:

The Company continues to deliver EVA growth consistently. The EVA margin on its unconsolidated revenue has remained in the range of 19 to 200/p during the last four years.

Revenue by Geographic Segment:

Revenues in all geographies have been growing. Dependence on Americas has been reducing relatively.

INTERNAL CONTROL SYSTEMS AND THEIR ADEQUACY:

The Company has in place adequate systems of internal control commensurate with its size and the nature of its operations. These have been designed to provide reasonable assurance with regard to recording and providing reliable financial and operational information, complying with applicable statutes, safeguarding assets from unauthorised use or losses, executing transactions with proper authorisation and ensuring compliance of corporate policies.

The Company has a well defined delegation of power with authority limits for approving revenue as well as expenditure. Processes for formulating and reviewing annual and long-term business plans have been laid down. The Company uses a state-of-the-art ERP system to record data for accounting and management information purposes and connects to different locations for efficient exchange of information. It has continued its efforts to align all its processes and controls with global best practices.

The Company has appointed Ernst and Young Private Limited to carry out internal audit of the Company's activities. The audit is based on an Internal Audit Plan, which is reviewed each year in consultation with the statutory auditors and the Audit Committee. In line with international practice, the planning and conduct of internal audit is oriented towards the review of controls in the management of risks and opportunities in the Company's activities. The Internal Audit process is designed to review the adequacy of internal control checks in the system and covers all significant areas of the Company's operations such as software delivery, accounting and finance, procurement, employee engagement, travel, insurance, IT processes in the Company, including significant subsidiaries and selected foreign branches. Safeguarding of assets and their protection against unauthorised use are also a part of these exercises.

The Company has an Audit Committee, the details of which have been provided in the Corporate Governance Report. The Audit Committee reviews Audit Reports submitted by the Internal Auditors. Suggestions for improvement are considered and the Audit Committee follows up on the implementation of corrective actions. The Committee also meets the Company's statutory auditors to ascertain, inter alia, their views on the adequacy of internal control systems in the Company and keeps the Board of Directors informed of its major observations from time to time.

DEVELOPMENTS IN HUMAN RESOURCES:

During fiscal 2008, the Company has made substantial addition to human resources. The total number of employees including Indian subsidiaries as on March 31, 2008 was 111,407 (89,419 as on March 31, 2007). Of these 111,407 employees at the end of fiscal 2008, 3,709 were the employees of the Company's Indian Subsidiaries, 10.005 were in the Company's overseas branches and subsidiaries of which 4,316 were the employees at our global or regional delivery centres. The Company had a gross addition (excluding Indian subsidiaries) of 35,672 (previous year 32,462) employees and a net addition of 22,116 (previous year 22,750) employees. The attrition rate of 12.6% (previous year 11.3%) in fiscal 2008 is one of the lowest in the industry. This low attrition rate has been achieved by continuously investing in learning and development programmes for employees, competitive compensation, creating a compelling work environment, empowering employees at all levels as well as a well-structured reward and recognition mechanism. The composition of the global workforce continues to show increasing trends in the number of female employees and foreign nationals from countries across the globe. As on March 31, 2008 women constituted 28% of the Company's workforce (26% as on March 31, 2007), the Company employed persons from 62 different nationalities and the percentage of non-Indian nationals constituted 9.1% as on March 31, 2008. The composition of this International workforce as on March 31, 2008 is shown in the following chart.

Composition of International Workforce:

Australian 1.1%American 10.4%Brazilian 14.3%British 11.3%Chilean 14.7%Chinese 10.1%Hungarian 3.9%Mexican 4.8%Uruguayan 7.0%Ecuadorian 10.8% Others 11.6%

Continuous interaction with universities and other educational institutions remains a central plank of the Company's strategy to attract the best scientific and engineering talent and engage in cutting-edge research and development in partnership with universities. Keeping this in mind and the Company's belief that the future of this industry will be driven by the ability of the Company to innovate, the Company has set up a customer focused global innovation network and also an Industry - Academia collaboration network with some of the foremost Universities in the world.

RESEARCH AND DEVELOPMENT:

The Company has established a network of Innovation Labs across the world to help catalyse and produce innovative solutions in technologies related to its core business in the different industry areas and strategic focus areas.

Some of the areas that the Company is focusing on are at the cutting edge of IT Research. In addition to specific products for commercial exploitation, some areas of long-term focus are:

* Opportunities in the intersection of biotechnology, nanotechnology and information technology.

* Effect of developments at atomic and sub-atomic levels affect on the future of computing.

* Possible disruptive technologies which may change the industry structure.

* Challenges of data intensive application.

* Convergence related technologies (Convergence of Information Technology, Communication, Content and Consumer Electronics Technologies).

* Opportunities in the gaming industry.

* Opportunities in the Open Source areas.

The Company has applied for numerous patents in its areas of interest and is continuing to invest in R&D, innovation and great technology people. The Leadership is committed to making the Company a global leader in innovative technology, a pioneer in path breaking research and becoming known as a company which leads the way in practicing disruptive and sustainable innovation.

Research and Development Expenditures:

Research and Development (R&D) expenditure is charged to the profit and loss account when incurred. Fixed assets utilized for R&D are capitalized and depreciated in accordance with the applicable depreciation rates. Research and development expenditure (unconsolidated accounts) aggregated Rs. 36.94 crore in fiscal 2008 (Rs. 28.02 crore in fiscal 2007). Research and development expenditure (consolidated accounts) - aggregated Rs.51.71 crore in fiscal 2008 (Rs. 40.89 crore in fiscal 2007).

Cautionary Statement:

Certain statements made in the Management Discussion and Analysis Report relating to the Company's objectives, projections, outlook, expectations, estimates and others may constitute 'forward looking statements' within the meaning of applicable laws and regulations. Actual results may differ from such expectations, projections and so on whether express or implied. Several factors could make significant difference to the Company's operations. These include climatic conditions and economic conditions affecting demand and supply, government regulations and taxation, natural calamities and so on over which the Company does not have any direct control.